Adelphia May File Chapter 11 Monday

Cable operator Adelphia Communications Corp., facing regulatory and criminal probes for its accounting practices, may file for bankruptcy protection as early as Monday, sources familiar with the matter said Friday.

The company is close to an agreement to borrow up to $1.5 billion from a group of banks led by J.P. Morgan Chase & Co. and Citigroup Inc. for debtor-in-possession financing, which is designed to keep a company solvent while it works to restructure under Chapter 11 bankruptcy protection.

Adelphia’s board is expected to meet Sunday. A source close to the company said that not all the financing arrangements are in place and that they could still unravel.

Adelphia, under federal investigation over its accounting practices, has been on the verge of bankruptcy since defaulting on more than $7 billion in bank debt and missing more than $100 million in interest and dividend payments. Lenders have held off demanding repayment, a move that would have forced a filing sooner, as the company tried to line up new loans.

“Bankruptcy was made for this company,” said Van Greenfield, a managing member of Blue River, which holds Adelphia preferred stock. “It needs a timeout from all the allegations to avoid having a death spiral in its value.”

The Securities and Exchange Commission and two federal grand juries are investigating Adelphia after the company guaranteed more than $3 billion in loans to partnerships run by founder and former Chief Executive John Rigas and his family. Rigas stepped down last month, and other family members have left the company in recent weeks.

Adelphia, the nation’s sixth-largest cable operator, probably will bring in new management and shed some assets after the expected Chapter 11 filing, investors said. The company has been trying to sell about half its assets, including cable systems in Los Angeles.