A bankruptcy judge on Tuesday granted Adelphia Communications Corp. permission to sell its assets to Time Warner Corp. and Comcast Corp. in an estimated $17 billion deal.
Judge Robert Gerber of the Southern District of New York said he would approve an order to be submitted later Tuesday to detach the asset sale from the rest of Adelphia’s bankruptcy process, allowing it to be executed without the approval of an overall restructuring plan. Adelphia sought the separation to bypass creditor disputes that have slowed the company in its filing of its plan.
The sale agreement with Time Warner and Comcast had been put in jeopardy because of a July 31 deadline at which the buyers could retract their offer. The offer includes a $12.7 billion cash component and the rest as shares in Time Warner. Once complete, the acquisitions would secure Time Warner’s and Comcast’s status as the two biggest cable operators in the nation.
Adelphia first announced the deal in April 2005 and had been trying to close it ahead of deadline.
“A good business opportunity is available so long as the parties act quickly,” the judge read from the order during the Tuesday hearing. “In such cases, the bankruptcy process should not straitjacket (the judge) to do what is best for the estate.”
The judge said the sale’s approval was not a reason for self-congratulation or rest given pending disagreements with creditors over how to distribute proceeds from the sale. The court had a hearing planned for Wednesday morning and a chamber’s conference scheduled for Thursday.
A representative of the creditors committee, David Friedman, said the sale “is an act simply of inhaling.” He added, “That is only half the respiratory process. We do need to exhale at some point. We do need to take all this value and distribute it to people who have waited almost four years.”
In a filing in support of the motion, Adelphia attorneys said, “The sale represents an extraordinary achievement for the debtors, as it includes a substantial control premium, and it promises to translate into significant recoveries for all the debtor’s principal stakeholders.”
A lawyer representing JPMorgan Chase Bank, Dennis Dunne, was alone in objecting to the sale before the court. He argued against separating the sale, noting that it was a cornerstone of an overall plan that had not yet received the votes it needed from creditors. He said, “I don’t think it’s appropriate, according to the bankruptcy procedures, that there should be an escape hatch.”
Dunne’s objections also related to whether JPMorgan would receive preference in the distribution of money from the sale.
Rachel Strickland, an attorney for the debtor, said, “In terms of the question ’Is my money going to be there for me,’ if the 363 sale doesn’t go forward, less money is going to be there for everyone.”
Adelphia’s majority ownership in two joint ventures with Comcast — Century-TCI and Parnassos — will be discussed in a hearing Wednesday. Adelphia is proposing a sale of its stake in both properties to Comcast, which would gain more than 1 million subscribers in markets in Los Angeles, upstate New York and northeastern Ohio. The sale of the interest in those two properties would proceed only in conjunction with the asset sale approved Tuesday. Both need to be approved for each to occur.
An Adelphia spokesman, Paul Jacobson, said Concast’s acquisition is also subject to approval by the Federal Communications Commission, which could decide by mid-July. “We still have hurdles to clear,” Jacobson said.
Adelphia last week filed an amended version of its restructuring plan. The company, the country’s fifth-largest cable operator, filed for bankruptcy protection on June 25, 2002, showing it had $2.3 billion in debt off its balance sheets.