Adelphia files for bankruptcy

Beleaguered cable television operator Adelphia Communications and over 200 of its subsidiaries have filed for bankruptcy protection in Manhattan after failing to attract a white knight investor.

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By  Richard Brown Published  June 26, 2002

The company’s spiral towards financial collapse began in March when it revealed it had guaranteed loans of $2.3 billion to the Rigas family, the company's controlling shareholders. Then its accountant, Deloitte & Touche, withdrew all the certifications of financial statements it had made of Adelphia and its subsidiaries since March 2001.

Finally, earlier this month, Adelphia - the US’s sixth largest cable operator - disclosed that it missed a $51 million interest payment on debts and that its subsidiary, Arahova Communications missed a $4 million interest payment on borrowings. Bondholders have said they will obstruct any sale of assets. Further compounding the stigma attached to Adelphia, Merrill Lynch International recently filed notice that it would sell 3,600,000 of the firm's shares.

Under investigation by the Securities and Exchange Commission and two federal grand juries, Coudersport, Pennsylvania-based Adelphia said that it would nevertheless carry on offering cable service to over 3,500 towns and cities and that its staff would continue to be paid.

Adelphia Chairman and interim Chief Executive Officer Erland Kailbourne said of the bankruptcy filing: "This action was taken to stabilize Adelphia's financial foundation and to continue quality service to our customers. After many weeks of hard work and careful consideration of all the strategic alternatives available, we determined that the restructuring of our debt through the Chapter 11 process is the optimal solution for helping Adelphia thoroughly resolve all the issues facing the company.”

Adelphia also disclosed that it had arranged a loan of $1.5 billion to help it reorganise its finance. Debtors in possession are JP Morgan Chase and Citigroup. "Entering into these proceedings will enable us to fully evaluate our enterprise without the immediate pressure to sell valuable assets," added Kailbourne.

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