Bankrupt cable-television giant Adelphia Communications Corp. has total creditor claims of $3 trillion — about 40 percent of the national debt, according to the Associated Press.
How can this be?
Many large companies are composed of multiple business units. Adelphia is a prime example; thanks to the acquisitive strategy of the former controlling family, the Rigases, the company is made up of 243 separate business entities. In the late 1990s, Adelphia shelled out about $12 billion to buy other cable systems, including Century, Los Angeles’ largest cable provider. As a result, it doubled the amount of subscribers to five million — but as Adelphia swelled in size, its structure became increasingly complicated, explained the AP.
When it filed for bankruptcy in 2002, Adelphia had $18.6 billion in debt — the amount it expects to eventually owe — according to the Denver Post. (The company moved from Coudersport, Pennsylvania, to the Denver suburb of Greenwood Village the next year.) Today, added the AP, analysts and creditors say the company is worth between $17 billion and $23 billion.
And now that the company has landed in bankruptcy court, “creditors have the obligation to correctly identify the entity that owes them,” Paul Rubner, a Denver bankruptcy lawyer, told the wire service. But “if the client is unsure,” added Rubner, “the lawyer is apt to file it in every possible case.”
It’s those duplicate claims — or “multiples of multiples,” in the words of Adelphia spokesman Paul Jacobson — that have raised the total from the mere billions to the trillions of dollars, according to the Post. Jacobson suggested that Adelphia’s case is “arguably the most complex bankruptcy in U.S. business,” added the AP.
It’s not uncommon for companies to spend upward of five years in bankruptcy; the Adelphia case threatens to drag on even longer. According to Jacobson, Adelphia has more than 60 accountants sifting through more than 7 million ledger entries dating back to 1998. The company eventually will restate its financials from 1999 through 2001, he added.