Adelphia Cable Corp is filing for Chapter 11 bankruptcy in US court in the wake of massive accounting fraud and corporate looting scandal involving the founding Rigas family. As per Chapter 11 Bankruptcy, it is basically for reorganization of Debts, Adelphia is alos contemplating to sell-off the assets under Section 363 of US Bankruptcy code. After initial interests of the acquirers there remained only two bidders Time Warner Company and Comcast corp. Adelphia Corp is founded by Rigas family and during its most of the operational years the firm is controlled by the family members, friends and the other directors who were also linked to Adelphia in Florida cable systems. Further in its bid to expand Adelphia borrowed heavily along with its subsidiary who issued their own public debt raising the debt figure to $9.3 billion from $3.5 billion. Also to avoid loss of control Rigas bought the Class B shares (carrying 10 votes per share) for this Adelphia provided loans to Rigas for buying their own shares. This was disclosed for the first time in 2001 annual report. The total co-borrowing arrangements rose to $2.5 billion. Also company has started doing defaults on interest payment and dividends payments on preferred stocks. Leading to developments of all these events on 24th Feb, federal authorities arrested the Rigas family members along with finance manager, assistant treasurer on account of fraud and conspiracy. On further probe it was unearthed that the scam was not only limited to co-borrowings but also to finance the person projects of Rigas from company money.
For the management of the Adelphia Bankruptcy, a new management team was brought on-board. The onus lying upon the new management team was not only to turn around business, dealing with court protocols, negotiating financial restructuring plan with creditors but also to deal with the damage caused by the years of accounting fraud and mismanagement.
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