Adelphia Questions

1. Evaluate Adelphia's business performance until 2000. Was the company adequately
capitalized (at this stage ignore the specific issues related to the co-borrowings)
considering its characteristics, strategy and risks?
2. What did the Rigas family management do wrong? Were any aspects of Adelphias
corporate governance/ownership structure under the Rigases problematic in your view? Is
there anything that concerns you about the Adelphia/Rigas family co-borrowing
arrangements?
3. If one ignores any alleged frauds by the Rigases, how viable was Adelphias business
prior to the bankruptcy filing?
4. Under pressure from Adelphias unsecured creditors, new management decided to put
the company up for sale rather than pursue a traditional stand-alone Chapter 11
reorganization plan. Are there reasons why management should reconsider this decision,
and in general, what considerations do you think are relevant in choosing between the
two approaches to solving financial distress (i.e. sale vs. reorganization)?
5. Based on financial and non-financial considerations, which of the competing offers (as
summarized in the text and in Exhibit 14 of the case) to purchase Adelphias assets should
management accept? Why?
6. By the Spring 2005, hedge funds had accumulated significant stakes throughout
Adelphias capital structure, including debt issued by Adelphias Arahova subsidiary (held
by Appalosa Management) and debt issued by the parent holding company (held by W.R.
Huff Asset Management) How serious are the disputes between these two investors, and
as Adelphia management, what could you do, to prevent these disputes from undermining
Adelphias sale to Time Warner/Comcast?
7. Suppose you are advising the Court on this restructuring. Propose a plan that in your
view is fair for all parties involved and detail how you would handle the holding/subsidiary
issue. Estimate the value appropriated by each main class of claimholder of the firm under
you plan.