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Friday, 23 August, 2002, 07:18 GMT 08:18 UK
Bankrupt US cable giant wins reprieve
John Rigas, the founder of cable television giant Adelphia Communications, is driven into federal court in Manhattan
Founder John Rigas faces charges of securities fraud
A bankruptcy court has given a breathing space to US cable TV giant, Adelphia Communications, by approving a $1.5bn restructuring plan for the firm to continue operating.

The judge approved the bailout, the second-biggest ever granted to a bankrupt US firm, after a seven hour hearing during which some creditors opposed the bailout.

Adelphia is under investigation for accounting irregularities by US regulators and five former executives, including three members of its founding family, have been charged with conspiracy to commit fraud.

Adelphi, the sixth largest cable TV operator in the US, arranged the restructuring finance with a group of about 80 banks led by JP Morgan Chase.

Banks 'to blame'

Some creditors have objected that the banks were responsible for lending some of the money whose use is being investigated.

They argued that the restructuring package should not allow the banks to receive interest payments on some of the loans.

Adelphia, which hopes to restructure is operations, got protection from its creditors by filing for Chapter 11 bankruptcy protection, but it must get court approval for its financial dealings.

Adelphia filed for bankruptcy in June, following disclosure the firm engaged in dubious multi-billion deals leading to two grand jury probes and an investigation by the US Securities and Exchange Commission (SEC).

US officials from the Department of Justice (DoJ) and the Securities and Exchange Commission (SEC) officials have said the actions of former Adelphia officers led to tens of billions of dollars in losses to investors.

Future offices of Adelphia Communications in Coudersport, Pennsylvania
Adelphia's future offices remain vacant

Adelphia's problems began in March when it admitted having guaranteed $2.3bn dollars in loans to the Rigas family, which then controlled the company.

Family steps down

The firm was founded in 1972 by John Rigas, who had transformed his cinema company to take advantage of the fledgling cable TV business.

All Rigas family members resigned from management positions and the Adelphia board of directors in May.

Adelphia, one of the largest issuers of junk bonds, is but one of a string of US firms under investigation for accounting irregularities that began last autumn when energy-trading giant Enron admitted it overstated profits by $600m.

See also:

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