Adelphia reorganization will wait


NEW YORK -- A federal judge said Wednesday that she would hold back for review the bankruptcy reorganization plan for Adelphia Communications in a move that could affect Time Warner Inc.'s spinoff of its cable unit.

U.S. District Judge Shira Scheindlin suspended the effect of a bankruptcy judge's approval of Adelphia's $15 billion bankruptcy reorganization plan, saying she would review a challenge from bondholders.

However, she also required the bondholders to post a $1.3 billion bond by today to help cover losses that other creditors might suffer from a delay, which could last more than a month, sources said.

If the bond isn't posted, the judge is expected to give the go-ahead for the bankruptcy plan.

TW has been simultaneously pursuing two tracks for a spin-off of Time Warner Cable.

In the first scenario, if the Adelphia bankruptcy plan goes ahead, TWC could become publicly traded without a formal initial public offering simply by way of a distribution of stock to creditors.

However, TW also has filed an IPO registration with the Securities and Exchange Commission, which would allow a spinoff in an IPO, including the related investor roadshow and the like.

The judge argued Wednesday that the stay is necessary because it is "extremely unlikely" that the bondholders would otherwise ever get a chance for a real appellate review.

However, she acknowledged that "a stay of a confirmation order in one of the longest-running and most complex bankruptcies in our history threatens grave harm to thousands of parties who have been waiting for more than four years to obtain sizable distributions from a group of bankrupt estates."

The plan, after much wrangling, was finally approved by creditors and then greenlighted by the bankruptcy court Jan. 3.

Spokespeople for Adelphia and TW declined to comment.