Adelphia Stakeholders Tell Judge of Their Anger

A day after seeking protection from creditors, Adelphia Communications Corp. told a bankruptcy judge that the debt-ridden cable television company is “eminently reorganizable.”

That sunny view of prospects for the sixth-largest U.S. cable TV company, though, did not sit well with the company’s stakeholders, who told the bankruptcy judge that they are angry over the collapse of Adelphia.

Adelphia got permission Wednesday from U.S. Bankruptcy Judge Robert Gerber to pay its employees, hire professionals and jointly administer the Chapter 11 filings of the parent and 228 subsidiaries. In the process, though, the company got an earful from stakeholders.

“Adelphia has literally been looted by the Rigas family, all to the detriment of the company’s bondholders and stockholders,” said David Friedman, an attorney for bond investors holding $10 billion worth of Adelphia’s debt.

“This is perhaps the single largest case of fraud in corporate history.”

Coudersport, Pa.-based Adelphia filed for Chapter 11 bankruptcy protection late Tuesday, listing $18.6 billion in debt and $24.4 billion in assets in court papers. It is the biggest cable television company to file for bankruptcy protection and is the fifth-largest filing in U.S. history.

The company is negotiating with creditors to sell almost half of its assets. It said Wednesday it has received as many as 10 inquiries from potential buyers for its cable systems.

At the first-day bankruptcy hearing in New York, attorneys for bondholders and shareholders aimed most of their anger at allegations of self-dealing among Rigas family members who founded the company.

Company founder and former Chairman John Rigas and his son Timothy, formerly the chief financial officer, resigned from the company in May. The Rigases did not attend the bankruptcy hearing.

The Rigases used company money to fund the Buffalo Sabres pro hockey team they own and buy company cars from a family-owned dealership, according to regulatory filings. The family also used guaranteed loans to buy company securities, the filings say.

Los Angeles may sue Adelphia if the cable TV provider doesn’t upgrade systems and maintain service quality, City Atty. Rocky Delgadillo said. Last week Delgadillo said he would advise the city to revoke or refuse to renew Adelphia’s contracts if the company fails to pay franchise fees and provide the promised quality of service.

“It’s just not fair that the Rigas family was off buying a hockey team when our customers were being denied Internet service,” Delgadillo said at a news conference.

Adelphia operates in five franchise areas of Los Angeles, serving about 250,000 subscribers.

The company said Wednesday that it plans to operate normally during reorganization with no interruption in services to its subscribers.