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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010

or

o          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                  

Commission File Number: 000-53209

Adelphia Recovery Trust

(Exact name of registrant as specified in its charter)

919 North Market Street, 17th Floor, PO Box 8705

Wilmington, Delaware 19899

(Address of principal executive offices) (Zip Code)

302-652-4100 Attn: Dean Ziehl

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x Yes No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    o Yes No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    o Yes No x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    o Yes No o

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ADELPHIA RECOVERY TRUST

FORM 10-Q

INDEX

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PART 1 - FINANCIAL INFORMATION

Item 1   Financial Statements

Adelphia Recovery Trust

Unaudited Condensed Balance Sheets

See accompanying notes to the condensed financial statements.

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Adelphia Recovery Trust

Unaudited Condensed Statements of Operations

See accompanying notes to the condensed financial statements.

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Adelphia Recovery Trust

Unaudited Condensed Statements of Cash Flows

See accompanying notes to the condensed financial statements.

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ADELPHIA RECOVERY TRUST

Notes to the Condensed Financial Statements — June 30, 2010 (Unaudited)

1                                          Background

The Adelphia Recovery Trust (the “ART”) was formed as a Delaware statutory trust pursuant to that certain First Modified Fifth Amended Joint Chapter 11 Plan of Reorganization (the “Plan”) of Adelphia Communications Corporation (“Adelphia” or “ACC” ) and certain of its subsidiaries (collectively the “Debtor”). The purpose of the ART is to prosecute the various causes of action transferred to the ART pursuant to the Plan (the “Causes of Action”) and distribute to the owners (the “Holders”) of the interests in the ART (“Interests”) the net proceeds of such Causes of Action (“Distributions”), according to the relative priorities established pursuant to the Plan, subject to the retention of various amounts to fund the prosecution of those Causes of Action and operations of the ART. Pursuant to the Plan, in addition to the Causes of Action, Adelphia transferred $25 million in cash to the ART, in connection with its formation, in order to fund the initial expenses of operation.

As set forth in the Plan, the ART is administered by five trustees (the “Trustees”) who are responsible for carrying out the purposes of the ART. Quest Turnaround Advisors, L.L.C. (“Quest”) is the plan administrator (in such capacity, the “Plan Administrator”) of Adelphia. Quest and Adelphia together have agreed to provide certain administrative services to the ART. In order to facilitate the provision of such administrative services, the ART has appointed Quest as the trust administrator of the ART (in such capacity, the “Trust Administrator”).

2                                          Basis of Presentation

The accompanying interim unaudited condensed financial statements of the ART have been prepared in accordance with generally accepted accounting principles in the United States of America for interim periods (“US GAAP”) and with the instructions to Form 10-Q.  As such, they do not include all of the information and disclosures required by US GAAP for complete financial statements.  In the opinion of the Trustees, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the interim unaudited condensed financial statements have been included.  These condensed financial statements should be read in conjunction with the ART’s audited financial statements for the year ended December 31, 2009 included in its Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 10, 2010. Interim results are not necessarily indicative of the results for the complete fiscal year. The unaudited condensed balance sheet as of December 31, 2009 was derived from the audited financial statements for the year then ended.

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3                                          Related Party Transactions

The Trust Administrator and Adelphia continue to provide administrative support to the ART including maintaining electronic data and paper documents used in prosecuting the Causes of Action, financial reporting and support for Distributions when they might occur (including maintenance of data related to the implementation of Plan provisions). These services have and will continue to be provided at no cost to the ART under the terms of various agreements between the Trust Administrator and Adelphia. The ART financial statements do not reflect any amounts for these services.

4                                          Causes of Action and Contingencies

Except as set forth below, there have been no material developments in the legal proceedings described in the ART’s Form 10-K as filed on March 10, 2010 or as updated in the ART’s Form 10-Q filed on May 7, 2010.

Bank Litigation

On May 14, 2010, the United States District Court for the Southern District of New York  ( the “District Court” ) denied the ART’s motion to reconsider or in the alternative, certify for immediate appeal of the District Court’s December 21, 2009 order holding that the ART lacks standing to pursue claims on behalf of ACC and may assert only claims on behalf of certain ACC subsidiaries ( the “Obligor Debtors” ).

On May 26, 2010, the Second Circuit affirmed in a summary order the District Court’s June 18, 2008 order and subsequent final judgment, dismissing certain fraudulent transfer claims, voidable preference claims, and equitable subordination and disallowance claims. On August 3, 2010, the United States Supreme Court granted the ART an extension of time to October 7, 2010 in which to file a petition for writ of certiorari from the Second Circuit’s order.

On June 1, 2010, the ART filed its oppositions to various summary judgment motions filed by Defendants on March 2, 2010.  The District Court has scheduled oral argument on those motions to begin August 10, 2010.

Under the schedule established by the District Court, trial on the pending tort, fraudulent conveyance, and BHCA claims will commence on October 25, 2010.

At this time, the ART cannot predict the outcome of these proceedings or estimate the possible financial effect of these proceedings on the ART’s financial statements.

Litigation Indemnification Fund Litigation

  On May 7, 2010, the Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) approved a Stipulation and Consent Order by and among Adelphia, ART, and claimant Societe Generale, S.A. resolving Adelphia’s and ART’s motion to disallow Societe Generale, S.A.’s fee claims.  An evidentiary hearing on the pending motions shall be scheduled with respect to the remaining parties.

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At this time, the ART cannot predict the outcome of these proceedings or estimate the possible financial effect of these proceedings on the ART’s financial statements.

5                                          Fair Value of Financial Instruments

As of June 30, 2010, the ART had temporary investments in FDIC insured six-month bank certificates of deposit (“CDs”) which had a carrying value of approximately $83.1 million. The carrying value represents the original investment of approximately $83.0 million, plus accrued interest of $73,211 through June 30, 2010. The carrying value approximates the fair value for these temporary investments as of June 30, 2010. The six-month CDs will mature on various dates in the third and fourth quarter of 2010.

The fair value of the note receivable and accrued interest has been determined using unobservable units (i.e. Level 3, as defined in Accounting Standards Codification 820-10) and approximates $4.7 million as of June 30, 2010 and $4.4 million as of December 31, 2009. The fair value was derived by discounting to June 30, 2010 and December 31, 2009 the projected maturity value of the note including accrued interest. The projected maturity values, including interest were calculated using life expectancy tables. The discount rate is based on the yield on the notes issued by the life insurance companies underwriting the life insurance policies and various risk factors associated with the note.

The carrying values were approximately $6.0 million as of June 30, 2010 and approximately $5.8 million as of December 31, 2009. The note bears 8% simple interest and is recourse only to the proceeds of various life insurance policies on Mr. and Mrs. Leonard Tow totaling approximately $28 million.

6                                          Subsequent Events

Events subsequent to June 30, 2010 have been evaluated through August 9, 2010, the date the accompanying financial statements were issued. Other than as discussed herein, there have been no subsequent events that would be material to the financial statements of the ART, including Cause of Action settlements or judgments or Distributions or decisions concerning future Distributions.

Item 2                                          Management Discussion and Analysis

Overview

The Adelphia Recovery Trust was formed as a Delaware statutory trust pursuant to that certain First Modified Fifth Amended Joint Chapter 11 Plan of Reorganization of Adelphia and certain of its subsidiaries. The purpose of the ART is to prosecute the various Causes of Action transferred to the ART pursuant to the Plan and distribute to the owners of the Interests in the ART the net proceeds of such Causes of Action, according to the relative priorities established pursuant to the Plan, subject to the retention of various amounts to fund the prosecution of those Causes of Action and operations of the ART. Pursuant to the Plan, in addition to the Causes of Action, Adelphia transferred $25 million in cash to the ART in connection with its formation in order to fund the initial expenses of operation.

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Adelphia and certain of its subsidiaries filed for Chapter 11 bankruptcy protection in June 2002. During the bankruptcy, on July 31, 2006 the assets of Adelphia were sold for a combination of cash and stock in Time Warner Cable, Inc. (“TWC”). In late 2006, representatives of various groups of creditors reached agreement on the allocation and distribution of the cash, TWC stock, other proceeds from the sale of estate assets and relative priorities to any Distributions arising from the Causes of Action contributed to the ART. This agreement was embodied in the Plan, which was confirmed in January 2007 and became effective on February 13, 2007 (the “Effective Date”). Under the Plan, the creditors and equity holders of Adelphia and certain of its subsidiaries received one or more of the following: cash, TWC stock, rights to future Distributions up to payment in full and the Interests.

The ART will dissolve upon the earlier of the resolution of all Causes of Action and the distribution of all of its assets to the Holders or the fifth anniversary of its creation. However, the Bankruptcy Court may approve an extension of the term if deemed necessary for the purposes of resolving the Causes of Action and distributing the net proceeds to Holders.

As set forth in the Plan and the Declaration of Trust for the ART, as amended (the “Declaration”), the ART is administered by five Trustees. These Trustees are authorized to carry out the purposes of the ART. In particular, the Trustees are responsible for protecting, maintaining, liquidating to cash and maximizing the value of the Causes of Action contributed to the ART, whether by litigation, settlement or otherwise.

Distributions

Pursuant to the Plan and the Declaration, Distributions to Holders are net of any costs and expenses incurred by the ART in connection with administering, litigating or otherwise resolving the various Causes of Action. Such costs and expenses may also include fees and expenses of the Trustees, premiums for directors and officers insurance, and other insurance and fees and expenses of attorneys and consultants. Distributions will be made only from assets of the ART and only to the extent that the ART has sufficient assets (over amounts retained for contingent liabilities and future costs and expenses, among other things) to make such payments in accordance with the Plan and the Declaration. No Distribution is required to be made to any Holder unless such Holder is to receive in such Distribution at least $25.00 or unless such Distribution is the final Distribution to such Holder pursuant to the Plan and the Declaration.

Distributions will be made at the sole discretion of the Trustees in accordance with the provisions of the Plan and the Declaration. As of the date hereof, the Trustees have determined the present best course of action is to retain the existing cash in reserve to administer the ART and fund the prosecution of the Causes of Action. Consequently, there have been no Distributions through the filing date of this Form 10-Q and none have been planned.

As of June 30, 2010, the number of Interests outstanding in each series eligible to receive a Distribution is as follows:

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(1) For each of these categories of Interests (which include disputed claims), each holder of a disputed claim was awarded one Interest. The number of Interests is expected to change based on the resolution of disputed claims.

Results of Operations

The ART operates pursuant to the Plan and the Declaration. The ART was formed as a Delaware statutory trust to prosecute various claims originally owned by Adelphia and, if any of the prosecutions are successful or are settled in a manner which provides economic benefit to the ART, to distribute excess proceeds over amounts retained to fund the prosecution of the Causes of Action and operations of the ART, to the Holders. It is not possible to determine at this time if there will be any excess proceeds available for a Distribution.

Second Quarter 2010 vs Second Quarter 2009

Total revenues consisting solely of interest decreased to approximately $160,000 in the second quarter of 2010 from approximately $199,000 in the second quarter of 2009. The decrease of approximately $39,000  was caused by a reduction in investment yields and average cash balances in the second quarter of 2010 compared to the second quarter of 2009. The Trust adjusted its investment strategy in the first quarter of 2010 to nominally improve yields as more fully described below in “Financial Condition and Cash Flow”. There were no settlements or related revenues for the second quarter of 2010 or for the second quarter of 2009.

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Total operating expenses for the ART decreased to approximately $7.6 million in the second quarter of 2010 from approximately $9.3 million in the second quarter of 2009. The decrease of approximately $1.7 million was caused by decreased professional litigation costs offset by increased general and administrative and professional administrative costs in the second quarter of 2010 versus the second quarter of 2009.

Professional litigation costs decreased by approximately $1.8 million in the second quarter of 2010 compared to the second quarter of 2009 due to decreased professional activity related to the Bank and Prestige Causes of Action.

General and administrative costs increased approximately $23,000 in the second quarter of 2010 when compared to the second quarter of 2009. The ART experienced increased costs of approximately $42,000 in the second quarter of 2010 for ART tax and SEC filings (“Regulatory Costs”) and Trustee expenses but had offsetting decreased costs of approximately $19,000 for insurance and other miscellaneous items between the same comparable periods.

Professional administrative costs increased approximately $95,000 in the second quarter of 2010 compared to the second quarter of 2009. The increased costs in the second quarter of 2010 relate primarily to increased ART Regulatory Costs for compliance.

As a result of the decrease in total revenues of approximately $39,000 and the decrease in total operating expenses of approximately $1.7 million in the second quarter of 2010 compared to the second quarter of 2009, the net loss of approximately $7.5 million for the quarter ended June 30, 2010 was approximately $1.6 million lower than the net loss for the quarter ended June 30, 2009.

Six months ended June 30, 2010 versus the six months ended June 30, 2009

Total revenues consisting solely of interest decreased to approximately $310,000 for the six months ended June 30, 2010 from approximately $528,000 for the six months ended June 30, 2009. The decrease of approximately $218,000 was caused by a reduction in investment yields during the six months ended June 30, 2010 compared to the six month period ended June 30, 2009. The Trust adjusted its investment strategy in the first quarter of 2010 to improve yields as more fully described below in “Financial Condition and Cash Flow”. There were no settlements or related revenues for the six months ended June 30, 2010 or for the six months ended June 30, 2009.

Total operating expenses for the ART increased to approximately $16.5 million for the six months ended June 30, 2010 compared to $16.3 million for the six months ended June 30, 2009. The increase of approximately $0.2 million was caused by increased professional litigation, general and administrative and professional administrative costs between the same comparable periods.

Professional litigation costs increased approximately $59,000 for the six months ended June 30, 2010 when compared to the six months ended June 30, 2009. There were increased

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costs for the Bank Cause of Action totaling approximately $273,000 and offsetting decreased costs of approximately $214,000 for the other Causes of Action for the six months ended June 30, 2010 when compared to the six months ended June 30, 2009. The changes in costs were caused by changes in activity levels related to the various Causes of Action.

General and administrative costs increased approximately $32,000 for the six months ended June 30, 2010 when compared to the six months ended June 30, 2009. The ART experienced increased costs of approximately $117,000 for the six months ended June 30, 2010 for ART bank fees,  Trustee expenses and Trustee additional service compensation but had offsetting decreased costs of approximately $85,000 for insurance, Regulatory Costs and other miscellaneous items between the same timeframes.

Professional administrative costs increased approximately $147,000 for the six months ended June 30, 2010 compared to the six months ended June 30, 2009. The increased costs relate primarily to increased costs for ART regulatory compliance and Cause of Action oversight.

As a result of the decrease in total revenues of approximately $218,000 and the increase in total operating expenses of approximately $238,000 for the six months ended June 30, 2010 compared to the six months ended June 30, 2009, the net loss of approximately $16.2 million for the six months ended June 30, 2010 was approximately $0.5 million higher than the net loss for the six months ended June 30, 2009.

Financial Condition and Cash Flows: Liquidity

The ART’s sources of liquidity are from (a) the $25 million transferred to the ART by Adelphia pursuant to the Plan on the Effective Date, (b) the successful resolution of Causes of Action and (c) earnings on invested cash balances. Receipts from these sources are used to pay professional and operating expenses of the ART and to fund Distributions to the Holders after reserving cash required to pay future professional and operating expenses of the ART. The Trustees regularly evaluate the future financial needs of the ART. After careful evaluation of future financial needs, the Trustees have determined that the present best course of action is to retain the existing cash in reserve to administer the ART and fund the prosecution of the Causes of Action. Consequently, there have been no Distributions through the date of this 10-Q and none have been announced.

Based upon cash and cash equivalent balances as of June 30, 2010 totaling approximately $62.2 million and temporary investments totaling approximately $83.1 million along with expected expenses and other potential disbursements, the ART expects to meet its obligations as they come due during the next twelve months. Due to the uncertain nature of future revenues and expenses beyond twelve months, it is not possible to be certain that cash will be available to cover all the future financial needs of the ART. Incurring debt, creating contingent obligation agreements and seeking methods to reduce legal professional and administrative costs are all strategies that could be undertaken to address liquidity issues should they arise. These strategies could impact the ART’s ability to maximize recoveries from settlements.

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The nature of the ART’s operation does not give rise to capital expenditures and there are no current or expected commitments for capital expenditures in the next twelve months. Should a need for capital expenditures arise, the ART would fund the requirement from existing assets. Additionally, the ART currently has no long-term contracts or other long-term obligations.

Cash and cash equivalent balances at June 30, 2010 of approximately $62.2 million are $102.1 million lower than as of December 31, 2009. This reduction is due to a use of cash and cash equivalents for operating activities of $19.0 million and for investing activities of $83.1 million to purchase CDs with six-month maturity dates. Such CDs are classified as temporary investments. The $19.0 million use of cash for operating activities included a net loss for the six months ended June 30, 2010 of approximately $16.2 million and a decrease in accrued expenses of approximately $2.8 million. The decrease in accrued expenses is due to the timing of vendor payments. Operating activities include the accrual of interest on a note receivable during the six months ended June 30, 2010 of approximately $0.2 million and the amortization of prepaid assets of approximately $0.3 million. Investing activities during the six months ended June 30, 2010 included the investment of $83.0 million of available cash and cash equivalents into CDs with a six-month maturity when purchased. These CDs have a carrying value at June 30, 2010 that includes accrued interest of $73,211.

As of June 30, 2010, the ART has moved a total of $129.0 million of cash and cash equivalents consisting of U.S. Treasury and government agency securities money market fund to three-month and six-month FDIC fully-insured bank CDs in order to improve the yields on invested cash. The $129.0 million of CDs is comprised of $83.0 million of six-month CDs classified as temporary investments and $46.0 million of three-month CDs that remain classified as cash and cash equivalents. The total of $62.2 million in cash and cash equivalents at June 30, 2010 includes the $46.0 million of 3-month CDs and $16.2 million of other investments and accrued interest. The ART considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. As such, the three-month CDs have been classified as cash equivalents and the six-month CDs are classified as temporary investments. All investments during the quarter were fully compliant with the ART investment policy.

Debt and Other Long-term Obligations

The ART has no debt, capital or operating lease or other long-term obligations and has no current plans to incur such obligations.

Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Results

This report on Form 10-Q contains forward-looking statements about the business, financial condition and prospects of the ART. The actual results of the ART could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties, including, without limitation, the number of and proceeds from litigations and/or settlements which are successful, delays in obtaining proceeds, the amount of funding required for the litigations and other operating expenses, economic conditions,

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changes in tax and other governmental rules and regulations applicable to the ART, and other risks identified and described in the Form 10-K filed with the SEC on March 10, 2010. These risks and uncertainties are beyond the ability of the ART to control, and in many cases, the ART cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this report the words “believes,” “estimates,” “plans,” “expects,” and “anticipates” and similar expressions as they relate to the ART or its management are intended to identify forward-looking statements.

Item 3                                          Quantitative and Qualitative Disclosures about Market Risk

The ART invests cash and cash equivalents in either FDIC insured deposit accounts, FDIC insured bank CDs or a money market fund invested in short-term U.S. Treasury and government agency securities including repurchase agreements collateralized fully by U.S. Treasury and government agency securities. The CDs have 3 or 6 month maturity terms and as of June 30, 2010 the money market fund has a 35 day effective maturity for the underlying securities. Interest income from these investments is subject to interest rate fluctuations.

Item 4                                                              Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The ART maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that such information is accumulated and communicated to ART Trustees and the Trust Administrator as appropriate, to allow timely decisions regarding required financial disclosure.

The Trustees and the Trust Administrator have completed an evaluation of the effectiveness of the design and operation of disclosure controls and procedures as of June 30, 2010. Based on their evaluation, the Trustees and the Trust Administrator concluded that as of June 30, 2010, the ART’s disclosure controls and procedures were effective.

Limitations on the Effectiveness of Controls

The Trustees and the Trust Administrator do not expect that the ART’s disclosure controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the ART have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some

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persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

During the quarter ended June 30, 2010, there were no changes in the ART’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the ART’s internal control over financial reporting.

PART II

Item 1       Legal Proceedings

Except as set forth below, there have been no material developments in the legal proceedings described in the ART’s Form 10-K as filed on March 10, 2010 or as updated in the ART’s Form 10-Q filed on May 7, 2010.

Bank Litigation

On May 14, 2010, the District Court denied the ART’s motion to reconsider or in the alternative, certify for immediate appeal of the District Court’s December 21, 2009 order holding that the ART lacks standing to pursue claims on behalf of ACC and may assert only claims on behalf of the Obligor Debtors.

On May 26, 2010, the Second Circuit affirmed in a summary order the District Court’s June 18, 2008 order and subsequent final judgment, dismissing certain fraudulent transfer claims, voidable preference claims, and equitable subordination and disallowance claims. On August 3, 2010, the United States Supreme Court granted the ART an extension of time to October 7, 2010 in which to file a petition for writ of certiorari from the Second Circuit’s order.

On June 1, 2010, the ART filed its oppositions to various summary judgment motions filed by Defendants on March 2, 2010.  The District Court has scheduled oral argument on those motions to begin August 10, 2010.

Under the schedule established by the District Court, trial on the pending tort, fraudulent conveyance, and BHCA claims will commence on October 25, 2010.

At this time, the ART cannot predict the outcome of these proceedings or estimate the possible financial effect of these proceedings on the ART’s financial statements.

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Litigation Indemnification Fund Litigation

On May 7, 2010, the Bankruptcy Court approved a Stipulation and Consent Order by and among Adelphia, ART, and claimant Societe Generale, S.A. resolving Adelphia’s and ART’s motion to disallow Societe Generale, S.A.’s fee claims.  An evidentiary hearing on the pending motions shall be scheduled with respect to the remaining parties.

At this time, the ART cannot predict the outcome of these proceedings or estimate the possible financial effect of these proceedings on the ART’s financial statements.

Item 1A.                 Risk Factors

As of the date of this filing there have been no material changes from the risk factors previously disclosed in our “Risk Factors” in the ART’s Form 10-K for the year ended December 31, 2009 as filed with the SEC on March 10, 2010.

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*Incorporated by reference to the Form 10 of Adelphia Recovery Trust (File No. 000-53209) filed April 30, 2008 and the amended Form 10 filed July 2, 2008.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

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