Adelphia debtor noteholders committee's requests to appoint trustee, terminate exclusivity denied

By Caroline Salls

Pittsburgh, Jan. 25 - Adelphia Communications Corp. debtor Arahova Communications Inc.'s ad hoc noteholders committee's request to appoint a Chapter 11 trustee for Arahova and terminate its exclusivity in connection with inter-creditor disputes on potential value and recoveries was denied, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The court said in the filing that the committee's motions represented the "nuclear war button" that would result in "devastatingly adverse consequences."

In particular, the court said appointment of a trustee would constitute a default under the company's debtor-in-possession facility agreement, which would "substantially impair" all of the Adelphia debtors' ability to operate their businesses.

According to the order, Arahova focused its efforts on maximizing value for every debtor, never acted against the interests of any individual debtor and proposed and gained approval of a mechanism for inter-creditor disputes to be litigated in a way that would give the creditors a full opportunity and resources to present their case.

The court also said the company stayed neutral in the inter-creditor disputes, proposing a reorganization plan that would escrow disputed value pending further court orders on the inter-creditor issues.

The court also said it was troubled by the fact that the conflict issues were raised so late in the bankruptcy case, while the supposedly disabling conflicts were apparent in the case more than three years ago.

In connection with the motion to terminate Arahova's exclusivity, the court said the committee's request "is still another tactical measure, to muddy the waters and complicate the debtors' presently pending plan efforts," with no corresponding ability to propose a plan that would work for Arahova, much less one that would give Arahova's creditors more value.

"Given the lack of meaningful alternatives and the dire consequences associated with imperiling the plan and its sale to Time Warner and Comcast, a balancing test tilts decidedly in favor of continuing exclusivity," the filing said.

Adelphia, a Greenwood Village, Colo.-based cable operator, filed for bankruptcy on June 25, 2002. Its Chapter 11 case number is 02-41729.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.