Creditors Committee Formed; Rigas Family Arrested
Adelphia Bankruptcy Case Trustee Limits Membership on Creditors Committee to Largest Banks & Corporations
Adelphia’s 11 largest creditors were named to the “Creditors’ Committee” in the ongoing bankruptcy proceedings against the corporation. Members of the committee (banks and major trade creditors like HBO and Viacom) will work with the court and Adelphia in developing a reorganization plan for the troubled company.
The Communications Workers of America (CWA), as collective bargaining representative for more than 400 workers at Adelphia, also sought to be a member of the Creditors Committee. The U.S. Trustee responsible for making appointments to the committee, however, followed traditional bankruptcy code guidelines, which provide that the committee “shall ordinarily consist of the. . . . seven largest claims against the debtor.”
CWA filed on behalf of the Adelphia employees and the monies that are owned them for their accrued, unpaid vacation pay, or grievance and arbitration claims covered under CWA’s collective bargaining agreements with the corporation.
Recently, CWA spoke to Adelphia’s new CEO expressing concern for the well-being of the companies employees and offering support for the company as it seeks to emerge from bankruptcy.
Seriousness of Charges Against Rigas Family and Ex Officials Are Underscored by Public Nature of the Government’s Arrests
The very public nature of the July 24 arrests of former Adelphia CEO John Rigas, 78, two of his sons, and two other ex-company officials underscored federal prosecutors’ intention to take tough action against corporate wrongdoers. Prosecutors could have sought indictments against the officials instead of carrying out public arrests.
The company’s new leadership issued a statement immediately afterward, stating that it supported the arrests and “believes that these actions will help Adelphia recover from the assets improperly taken from the company by the Rigas family.” The company, which has filed a $1 billion lawsuit against the Rigas family, is not currently being charged with any wrongdoing itself, but federal prosecutors are continuing with their investigation.
Arrested were besides CEO John Rigas, his sons Timothy (the former CFO and chief accounting officer) and Michael (former vp for operations), James Brown (former vp of finance), and Michael Mulcahey (former director of internal reporting).
Among other things, the federal suit has charges defendants with using company jets for private use, using $252 million in company money to meet margin calls on the family’s private stock purchases, and spending nearly $13 million in Adelphia funds to build a golf course. Former CEO John Rigas reported borrowed a million dollars a month for 12 months to pay off personal debt of nearly $66 million during a year which he reported in public documents that his compensation was less than $1.9 million.
