Adelphia Communications Corp. opposed a bid by 11 noteholders to overturn its plan to exit bankruptcy, saying the plan's settlement among creditors was proper.
The company and the official Adelphia's creditors committee asked a federal judge to reject the noteholders' request to throw out the plan and reassign Adelphia's bankruptcy case to a new judge. In a filing today in New York federal court, the company and the committee said the noteholders are a ``dissident'' group seeking to delay the plan with objections that are ``unwarranted.''
``They seek to raise the spectre of an indeterminate delay in completion of these cases,'' the company said in the filing.
Adelphia's plan to exit bankruptcy and distribute $17 billion in stock and cash to thousands of creditors was approved Jan. 5. The noteholders say the plan includes an invalid settlement among creditors, and they object to the value placed on Time Warner Cable Inc. (TWC) shares that Adelphia received when it sold its assets to Time Warner and Comcast Corp. (CMCSA) last year.
Adelphia said in the filing today that a noteholders' committee didn't vote to oppose the settlement or the exit plan and that the company was authorized to propose the settlement as part of its exit plan. The noteholders must file their reply brief by Feb. 28.
U.S. District Judge Shira Scheindlin granted holders of $1.12 billion in Adelphia notes a stay of the bankruptcy plan on Jan. 24. The exit plan's delay has postponed trading of Time Warner Cable shares on the New York Stock Exchange and is costing Adelphia $2.4 million a day in interest on bank loans.
The 11 noteholders include Bank of America Corp.'s Banc of America Securities LLC and a unit of Lehman Brothers Holdings Inc. On Feb. 9, a federal appeals court upheld Scheindlin's order that the noteholders post a $1.3 billion bond to hold off the implementation of Adelphia's plan while they try to scuttle it. On Feb. 12, Scheindlin declared the plan to be in effect.
Adelphia filed for bankruptcy protection in June 2002 after the discovery of an accounting fraud. Adelphia founder John Rigas was convicted of fraud in 2004 and sentenced to 15 years in prison. He is free during his appeal.
The case is In re Adelphia Communications Corp., 02-41729, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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