Adelphia seeks approval of joint venture lender holdback settlement

By Caroline Salls

Pittsburgh, March 15 - Adelphia Communications Corp. requested court approval of a stipulation regarding the Century-TCI debtor's credit facility holdback, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The Century-TCI administrative agent withheld 1% of the debt under the credit agreement from distributions to lenders in connection with Adelphia's joint venture plan of reorganization.

As previously reported, the purpose of the holdback was to provide funds to backstop the administrative agent's entitlement to indemnification under the credit agreement, and the lenders asked the administrative agent to release the holdback.

Under the stipulation, each lender will select one of two options for its portion of the holdback.

Under the first option, the administrative agent will continue to withhold the holdback share in an interest-bearing segregated account, and, if the share is not exhausted in litigation, the unused portion will be paid to the lender with accrued interest.

Under the second option, the administrative agent will return the holdback share to the lender upon the lender agreeing to several conditions, which include:

• The lender must provide proof of ability to pay any amounts due;

• Any claim arising from the holdback agreement will be submitted to arbitration;

• If the administrative agent cannot receive payment of fees from the litigation indemnification fund, the administrative agent will bill the electing lender;

• If the administrative agent's fees are less than $1.25 million, it will issue invoices to electing lenders for fee payment; and

• If the electing lender fails to pay the invoice in the time period specified, it will become a defaulting lender.

Adelphia, a Greenwood Village, Colo.-based cable operator, emerged from bankruptcy on Feb. 13. Its Chapter 11 case number is 02-41729.

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