Adelphia Reorg Declared Effective

Plan gets the green light after dissident bondholders fail to post a $1.3 billion bond while they appeal.
Stephen TaubFebruary 12, 2007

Adelphia Communications can distribute $17 billion in cash and stock to its creditors, according to a ruling Monday by U.S. District Judge Shira Scheindlin.

The reorganization plan had been approved in bankruptcy court on January 3, but Judge Scheindlin stayed that approval three weeks later after a group of Adelphia bondholders appealed the plan. The judge also ruled, however, that they must post a $1.3 billion bond during the course of their appeal.

Last Friday, according to Reuters, the U.S. Court of Appeals for the Second Circuit ruled that since the bond was not posted, Judge Scheindlin could vacate the appeal and declare the reorganization plan effective.

The wire service also observed that Time Warner Cable is one step closer to going public. Its parent, Time Warner, has teamed up with Comcast in a $17 billion deal to acquire cable systems from Adelphia.

Martin Bienenstock, a lawyer for the bondholders, had a word of caution, according to Bloomberg reported. “Everyone should be advised that every distribution may have to be disgorged if we are successful on appeal,” he reportedly said.

Meanwhile, Foamex International announced on Monday that it had emerged from Chapter 11 bankruptcy protection after its reorganization plan had become effective.

The manufacturer of cushioning also announced that Gregory J. Christian — who had held the titles of executive vice president, chief restructuring officer, chief administrative officer, and general counsel — has been named president, effective immediately. Christian, who joined the company in 1996, will also continue to serve on the board of directors.