Bankruptcy Exit Plan By Adelphia Is Approved By Federal Bankruptcy Judge
A federal bankruptcy judge has approved Adelphia Communication Corp.’s plan to pay its creditors and conclude one of the largest bankruptcy cases in U.S. history. Adelphia, formerly the fifth largest cable television company in the United States, had filed for bankruptcy protection from creditors in 2002.
Last July, Adelphia sold substantially all of its cable operations to Time Warner Inc. and Comcast Corp. for $17.6 billion in cash and shares in Time Warner’s cable unit. From this amount, $15 million of this will be used to pay creditors. After paying its debts, Adelphia will terminate its business. In July 2004, Timothy Rigas (the finance chief of Adelphia at the time) and his father John were convicted of securities fraud and conspiracy.
CBSnews.com offers the following timeline of key events that led to Adelphia to file for bankruptcy:
1952
John Rigas, operating a small theater in Coudersport, Pa., buys a cable franchise on a friend's advice. At the time only 60 small cable systems exist in the United States. Rigas and his brother, Gus, name their company Adelphia, Greek for "brothers."
1983
John Rigas buys out Gus Rigas' interest. Later, his sons — Michael, Timothy and James — become executive vice presidents, directors and principal stockholders.
1994
John Rigas becomes majority owner of the Buffalo Sabres hockey team with a $15 million investment.
1998
Adelphia reaches 2 million customers.
1999
The company's size more than doubles when Timothy Rigas, the chief financial officer and chief accounting officer, leads in arranging the acquisitions of FrontierVision, Century Communications and Harron Communications.
2000
John Rigas becomes owner of the Sabres when he buys out the minority shareholders.
March 26, 2002
Adelphia stock trades at $20.39.
March 27, 2002
Adelphia says the Rigas family borrowed $2.3 billion through various family-owned partnerships. The company says it may be liable for some of the debt. Adelphia's stock drops 18 percent. Subsidiary, Adelphia Business Solutions Inc., files for bankruptcy protection.
March 28, 2002
Adelphia acknowledges that it may be liable for as much as $500 million in debt it guaranteed for Adelphia Business Solutions Inc.
April 1, 2002
Adelphia says in a Securities and Exchange Commission filing that it needs more time to review its accounting and will not meet the deadline for filing its annual 10-K financial statement. Stock closes at $13.12.
April 2, 2002
The first in a flurry of shareholder lawsuits accuses Adelphia of misleading stockholders by failing to disclose the off-balance-sheet debt, and alleges that a drop in the stock price was "in response to these negative announcements."
April 3, 2002
Adelphia says the SEC is conducting an informal inquiry into the off-the-books debt.
April 4, 2002
Adelphia announces it has hired three investment banks as financial advisers to explore possible cable asset sales and other ways to reduce debt.
April 17, 2002
Adelphia reveals that the SEC had opened a formal investigation into its accounting practices.
May 2, 2002
Adelphia says it expects to restate 1999, 2000 and 2001 financial results to show the off-the-books debt as liabilities.
May 8, 2002
Adelphia announces it is soliciting bids for cable systems in the Los Angeles area, Florida, Virginia and elsewhere in the Southeast — nearly half of its 5.7 million subscribers — to reduce debt.
May 15, 2002
Rigas, 77, steps down as CEO. Erland E. Kailbourne, chairman of the Adelphia board's audit committee, is named chairman and interim CEO. Nasdaq halts trading of Adelphia's stock, citing a need for "additional information."
May 16, 2002
Adelphia announces the resignation of its chief financial officer, Timothy J. Rigas.
May 17, 2002
Adelphia discloses that federal grand juries in New York and central Pennsylvania are probing the company's finances. Kailbourne says the company has missed $44.7 million in bond interest payments.
May 23, 2002
The Rigas family relinquishes control as John Rigas and sons Timothy, Michael and James resign as directors. The family agrees to help cover loans. Adelphia now estimates it is liable for $3.1 billion in family debts.
May 24, 2002
Adelphia releases details showing that the Rigas family used the company's cash or assets to help it buy and operate the Sabres, expand personal cable company holdings, acquire timberland and invest in a golf course.
June 3, 2002
Adelphia's stock is dropped from Nasdaq and trades at 75 cents on the over-the-counter market.
June 10, 2002
Adelphia says it would revise its subscriber count downward by more than 47,000 to 5.76 million. The company says it dismissed Deloitte & Touche as its accountant and is seeking a replacement.
June 14, 2002
Adelphia says it has hired the accounting firm PricewaterhouseCoopers. Adelphia also says it fired seven employees "whose primary function was to provide services to members of the Rigas family."
June 17, 2002
Adelphia misses $96 million in bond interest and preferred stock dividend payments.
June 25, 2002
Adelphia files for bankruptcy.
July 24, 2002
John Rigas is arrested along with sons Timothy and Michael on conspiracy charges alleging they looted their company, using it as their "personal piggy bank."
Sept. 23, 2002
John J. Rigas, his sons, Timothy and Michael; James R. Brown, former vice president of finance; and Michael C. Mulcahey, former director of internal reporting, are indicted on charges that include conspiracy, securities fraud and wire fraud.
Nov. 14, 2002
Former Adelphia executive James R. Brown pleads guilty to securities fraud, conspiracy to commit securities fraud and bank fraud in a deal to testify against Rigas family members. He had faced up to 30 years in prison for the most serious charge, bank fraud.
Jan. 10, 2003
Adelphia's former accounting director pleads guilty to conspiracy to commit securities fraud. Timothy A. Werth enters the plea as part of a deal with prosecutors aimed at strengthening the government's case against Rigas and his sons.
July 8, 2004
John Rigas and his son, Timothy, are convicted of conspiracy, bank fraud and securities fraud for looting Adelphia and duping its investors. Another Rigas son, Michael, is acquitted of conspiracy charges and the jury is undecided on remaining counts against him.
April 21, 2005
Time Warner and Comcast, America's two largest cable TV companies, announce an agreement to buy Adelphia's assets. In the $17.6 billion multipart deal, Comcast gets an additional 1.8 million subscribers while Time Warner adds 3.5 million. Approval by regulators and bankruptcy court is required.
June 20, 2005
Adelphia founder John Rigas, 80, is sentenced to 15 years in prison; his son, Timothy, receives a 20-year term. "Were it not for your age and health, I would impose a sentence far greater than I do today," U.S. District Judge Leonard Sand told the elder Rigas.
Oct. 7, 2005
Adelphia's founder and one of his sons are indicted on charges that they didn't pay $300 million in taxes. According to a federal grand jury indictment, former CEO John Rigas failed to report income of $143 million while his son, Timothy, the company's former chief financial officer, failed to report income of $239 million.
Nov. 23, 2005
Former executive Michael Rigas pleaded guilty to a charge of making a false entry in a financial record, eliminating the need for his retrial on securities fraud and bank fraud charges. Rigas is a son of Adelphia founder John Rigas.
March 3, 2006
Michael Rigas, 51, was sentenced to 10 months home confinement as a result of his guilty plea to a charge of making a false entry in a company record. The former executive VP for operations is a son of Adelphia founder John Rigas.
Sagaria Law, P.C. represents consumers and businesses who wish to file for bankruptcy protection. We represent clients in bankruptcy and business formation-related matters in Santa Clara County, Monterey County, and Alameda County. For a free consultation, contact Sagaria Law, P.C. today.
Adelphia bankruptcy judge approves creditor plan, Pittsburgh Review-Tribune, January 4, 2007
Judge OKs Adelphia's plan to exit Chapter 11, Buffalonews.com, January 4, 2007
Adelphia's Path To Bankruptcy, CBSnews.com, January 4, 2007
Related Web Resource:
Bankruptcy Facts and Timeline, Adelphia.com
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