Adelphia granted court approval for its plan of reorganization

By Jennifer Lanning Drey

Portland, Ore., Jan. 5 - Adelphia Communications Corp. (ACC) obtained court approval for its first-modified, fifth-amended joint plan of reorganization, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Adelphia expects the plan to become effective on Jan. 17, assuming there are no further stays. There is a stay on the confirmation order pending an appeal until Jan. 16.

Adelphia intends to make the close of business on Jan. 10 the record date for distributions for holders of claims in the bank claims classes, trade claims classes and other unsecured claims classes. For notes claims classes and holders of equity interests the record date will be the close of business on Jan. 17, again assuming no further stays.

The plan distributes the $15 billion that remains after the $17.6 billion sale of the company to Time Warner Cable and Comcast Corp. and after the distribution of the first $2.6 billion under an earlier confirmed plan for joint venture debtors in the Chapter 11 case.

The plan also includes, as its cornerstone, a settlement of intercreditor disputes.

Creditor treatment

Under the plan:

• ACC senior notes claimants will receive a settlement distribution of $1.13 billion.

• Holders of ACC senior note claims, trade claims and other unsecured claims will receive payment in their share of the ACC senior notes allocable portion plus the ACC subordinated notes allocable portion of the initial ACC settlement consideration, plus an incremental ACC settlement consideration, plus any remaining assets, plus an additional incremental consideration, if applicable, and contingent value vehicle (CVV) series ACC interests.

• The Arahova note claims class will be allocated all of the Arahova noteholders committee's settlement party fee claims, one-third of a second committee's settlement party fee claims, one-quarter of all settlement party fee claims of the FrontierVision committee in excess of $5 million, but less than $10.5 million, provided that no more than $1.38 million will be allocated to the Arahova notes claims class, and a percentage of Huff's settlement party fee claims.

• ACC senior note claimants will receive CVV series ACC-1 interests, trade claimants will receive CVV series ACC-2 interests and other unsecured claimants will receive CVV series ACC-3 interests.

Frontier settlement

As part of a settlement with FrontierVision noteholders included in the plan:

• The plan administrator will establish an $8.5 million fund to pay FrontierVision post-effective date fee claims.

• Each remaining bank claims class that voted to accept the plan will receive distributions from a litigation fund, with many of the classes receiving distribution from a $21 million litigation fund, increased from $20 million, and others from separate $12 million, $3 million or $1 million funds;

• In exchange for FrontierVision Opco and FrontierVision Holdco agreeing to change their plan votes to accepting, Adelphia agreed to allow for payment of fees on the Frontier Vision Opco notes, with FrontierVision Opco and FrontierVision Holdco notes claimants being allocated in excess of $10.5 million in settlement party fee claims;

• The Arahova note claims class will be allocated all of the Arahova noteholders committee's settlement party fee claims, one-third of a second committee's settlement party fee claims, one-quarter of all settlement party fee claims of the FrontierVision committee in excess of $5 million, but less than $10.5 million, provided that no more than $1.38 million will be allocated to the Arahova notes claims class, and a percentage of Huff's settlement party fee claims.

• The plan administrator will establish a separate reserve for projected, contingent, unliquidated or disputed administrative claims, to be funded on the effective date in an amount to be determined by the plan administrator.

True-up holdback mechanism

Also under the plan, the total number of shares of Time Warner Cable class A common stock to be withheld from a settlement consideration is 16.9% of the total number of settlement consideration shares.

After the initial Time Warner class A common stock distributions and the distribution and release from the true-up holdback, the number of shares to be distributed to the recipient of a settlement consideration or a holder of a claim against a subsidiary debtor cannot be less than 83.1% of the number of shares that would have been distributed under a hypothetical subsidiary stock distribution.

In addition, the market value of the class A common stock under the true-up mechanism cannot exceed $41.68.

Adelphia, a Greenwood Village, Colo.-based cable operator, filed for bankruptcy on June 25, 2002 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 02-41729.

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