Attached files
file | filename |
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EXCEL - IDEA: XBRL DOCUMENT - Adelphia Recovery Trust | Financial_Report.xls |
EX-31.1 - EX-31.1 - Adelphia Recovery Trust | a12-13292_1ex31d1.htm |
EX-32.2 - EX-32.2 - Adelphia Recovery Trust | a12-13292_1ex32d2.htm |
EX-31.2 - EX-31.2 - Adelphia Recovery Trust | a12-13292_1ex31d2.htm |
EX-32.1 - EX-32.1 - Adelphia Recovery Trust | a12-13292_1ex32d1.htm |
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, 2012
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)
Delaware |
|
11-6615508 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
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
(Registrants 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 x 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.
Large accelerated filer o |
|
Accelerated filer o |
|
|
|
Non-accelerated filer o |
|
Smaller reporting company x |
(Do not check if a smaller reporting company) |
|
|
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
ADELPHIA RECOVERY TRUST
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
Adelphia Recovery Trust
Unaudited Condensed Balance Sheets
|
|
As of |
|
As of |
| ||
|
|
|
|
|
| ||
Assets |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
37,847,945 |
|
$ |
72,578,669 |
|
Prepaid assets |
|
587,455 |
|
1,234,649 |
| ||
Note and accrued interest receivable |
|
6,753,865 |
|
6,558,853 |
| ||
Total assets |
|
$ |
45,189,265 |
|
$ |
80,372,171 |
|
|
|
|
|
|
| ||
Liabilities and net assets |
|
|
|
|
| ||
Accrued expenses |
|
$ |
304,140 |
|
$ |
317,506 |
|
Total liabilities |
|
304,140 |
|
317,506 |
| ||
Net assets |
|
44,885,125 |
|
80,054,665 |
| ||
|
|
|
|
|
| ||
Total liabilities and net assets |
|
$ |
45,189,265 |
|
$ |
80,372,171 |
|
See accompanying notes to condensed financial statements.
Adelphia Recovery Trust
Unaudited Condensed Statements of Operations
|
|
For the |
|
For the |
|
For the |
|
For the |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Revenues |
|
|
|
|
|
|
|
|
| ||||
Interest income |
|
$ |
102,208 |
|
$ |
129,470 |
|
$ |
205,728 |
|
$ |
265,706 |
|
Total revenues |
|
102,208 |
|
129,470 |
|
205,728 |
|
265,706 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses |
|
|
|
|
|
|
|
|
| ||||
General and administrative expenses |
|
333,368 |
|
347,012 |
|
1,065,291 |
|
1,110,590 |
| ||||
Professional expenses - litigation |
|
1,913,793 |
|
2,480,201 |
|
3,943,614 |
|
3,915,504 |
| ||||
Professional expenses administrative |
|
246,205 |
|
94,487 |
|
366,363 |
|
476,695 |
| ||||
Total operating expenses |
|
2,493,366 |
|
2,921,700 |
|
5,375,268 |
|
5,502,789 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
|
$ |
(2,391,158 |
) |
$ |
(2,792,230 |
) |
$ |
(5,169,540 |
) |
$ |
(5,237,083 |
) |
See accompanying notes to condensed financial statements.
Adelphia Recovery Trust
Unaudited Condensed Statements of Cash Flows
|
|
For the |
|
For the |
| ||
|
|
|
|
|
| ||
Operating activities |
|
|
|
|
| ||
Net loss |
|
$ |
(5,169,540 |
) |
$ |
(5,237,083 |
) |
Adjustments to reconcile net loss to net cash used by operating activities consisting of changes in operating assets and liabilities: |
|
|
|
|
| ||
Prepaid assets |
|
647,194 |
|
(845,176 |
) | ||
Note and accrued interest receivable |
|
(195,012 |
) |
(195,012 |
) | ||
Accrued expenses |
|
(13,366 |
) |
(912,521 |
) | ||
Net cash used by operating activities |
|
(4,730,724 |
) |
(7,189,792 |
) | ||
|
|
|
|
|
| ||
Investing activities |
|
|
|
|
| ||
Sale of temporary investments and accrued interest |
|
|
|
64,808,133 |
| ||
Net cash provided by investing activities |
|
|
|
64,808,133 |
| ||
|
|
|
|
|
| ||
Financing activities |
|
|
|
|
| ||
Interest holder distributions |
|
(30,000,000 |
) |
|
| ||
Net cash used by financing activities |
|
(30,000,000 |
) |
|
| ||
|
|
|
|
|
| ||
Net change in cash and cash equivalents |
|
(34,730,724 |
) |
57,618,341 |
| ||
Cash and cash equivalents, beginning of period |
|
72,578,669 |
|
21,887,750 |
| ||
Cash and cash equivalents, end of period |
|
$ |
37,847,945 |
|
$ |
79,506,091 |
|
See accompanying notes to condensed financial statements.
ADELPHIA RECOVERY TRUST
Notes to Condensed Financial Statements June 30, 2012 (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 $25.0 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 ARTs audited financial statements for the year ended December 31, 2011 included in its Form 10-K filed with the Securities and Exchange Commission (SEC) on March 9, 2012. Interim results are not necessarily indicative of the results for the complete fiscal year. The unaudited condensed balance sheet as of December 31, 2011 was derived from the audited financial statements for the year then ended.
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
Except as set forth below, there have been no material developments in the legal proceedings described in the ARTs Form 10-K as filed on March 9, 2012.
Pending Causes of Action
Goldman Sachs Litigation
On July 6, 2003, the Creditors Committee filed a complaint in the Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) against Adelphias pre-petition commercial banks and lenders, Adelphias former investment bankers and financial advisors, and assignees of Adelphias pre-petition bank debt (the Bank Litigation). On February 9, 2006, the United States District Court for the Southern District of New York (the District Court) granted a motion filed by certain defendants to withdraw the reference to the Bankruptcy Court.
The complaint included a claim for intentional fraudulent transfer against Goldman Sachs, Inc. arising from Adelphias pre-petition repayment of the Rigases personal margin loans in an amount of approximately $63 million. On May 6, 2009, the Court denied Goldman Sachs motion to dismiss. Goldman moved for summary judgment on March 2, 2010. Following argument in August 2010, Goldman supplemented its motion on November 12, 2010. On April 7, 2011, the District Court granted Goldmans summary judgment motion and judgment was entered on April 13, 2011. On May 6, 2011, the ART timely filed its notice of appeal to the Court of Appeals for the Second Circuit and subsequently filed an appeal. On April 25, 2012, the Second Circuit Court of Appeals heard oral argument on the appeal and took the case under advisement.
At this time, the ART cannot predict the outcome of the Goldman Sachs Litigation or estimate the possible financial effect of this proceeding on the ARTs financial statements.
FPL Litigation
On June 24, 2004, the Creditors Committee filed a fraudulent conveyance complaint against FPL Group, Inc. and West Boca Security, Inc. (collectively, FPL) in the Bankruptcy Court for the Southern District of New York relating to pre-petition transactions. The FPL action seeks to recover an alleged fraudulent transfer arising out of Adelphias repurchase of certain of its stock from FPL in January 1999 for $149.5 million. Pursuant to the Plan, the claims asserted in the FPL Litigation were transferred to the ART.
On July 13, 2011, the Bankruptcy Court denied FPLs motion for leave to amend its answer to add a new defense. FPL filed an appeal of the Bankruptcy Courts July 13, 2011 decision. FPLs appeal has been briefed by the parties and is under submission to the District Court. On September 28, 2011, FPL moved to withdraw the reference to Bankruptcy Court. The District Court denied FPLs motion to withdraw the reference on January 30, 2012. Trial began April 30, 2012 and testimony concluded on May 3, 2012. The parties submitted post-trial briefs on June 22, 2012. The Bankruptcy Court heard closing arguments on July 25, 2012.
At this time, the ART cannot predict the outcome of the FPL Litigation or estimate the possible financial effect of this proceeding on the ARTs financial statements.
Sabres Litigation
The Sabres action involves claims for fraudulent conveyance, aiding and abetting breach of fiduciary duty, and equitable subordination or disallowance against Key Bank, N.A. (Key Bank), Fleet National Bank (Fleet), and HSBC Bank USA, N.A. (HSBC) (collectively, the Sabres Banks) arising from (i) Adelphias purchase of and payments on certain loans made by the Sabres Banks to a Rigas Family partnership that owned the Buffalo Sabres hockey team and (ii) John Rigas purchase of the team using Adelphia financing. HSBC has asserted counterclaims against Adelphia for post-petition tort, contribution and indemnification.
The District Court for the Western District of New York granted a permanent injunction against the ARTs prosecution of the fraudulent conveyance claims against the Sabres Banks and the Second Circuit affirmed that decision. The ARTs claims against Fleet were resolved as part of the settlement between the ART and Fleet and other defendants in the Bank Litigation.
On May 18, 2012, the Court dismissed the Trusts claims for aiding and abetting breach of fiduciary duty and equitable subordination or disallowance and HSBCs counterclaims. The Court entered judgment and dismissed the case on May 22, 2012. The ART determined to not appeal the decision.
Prestige Litigation
On June 24, 2004, the Creditors Committee filed an adversary action against Prestige Communications of NC, Inc., Jonathan J. Oscher, Lorraine Oscher McClain, Robert F. Buckfelder, Buckfelder Investment Trust, and Anverse, Inc. in the Bankruptcy Court for the Southern District of New York. In a decision dated January 8, 2008, the District Court withdrew the reference to the Bankruptcy Court in the Prestige action and transferred the case to the District Court.
The Prestige action seeks to recover fraudulent transfers in connection with Adelphias purchase of the assets of Prestige Communications of N.C., Inc., an acquisition that closed on July 5, 2000, as well as a claim that the owners of the Prestige Cable Systems aided and abetted breaches of fiduciary duty on the part of the Rigas family in connection with the transaction. Pursuant to the Plan, which became effective on February 13, 2007, the claims asserted in the Prestige Litigation were transferred to the ART.
On October 27, 2009, Defendants moved for summary judgment on the ARTs claims. On June 27, 2011, the District Court granted Defendants summary judgment motion and judgment was entered on June 28, 2011. The ART timely filed its notice of appeal to the Court of Appeals for the Second Circuit. The parties are briefing the appeal.
At this time, the ART cannot predict the outcome of the Prestige Litigation or estimate the possible financial effect of this proceeding on the ARTs financial statements.
Avoidance Actions
On July 31, 2003, Adelphia and its debtor affiliates filed with the Bankruptcy Court their Statements of Financial Affairs, which included a schedule of payments to insider entities made within one year prior to Adelphias filing for bankruptcy and payments to non-insider entities made within ninety days prior to Adelphias filing for bankruptcy. Subsequently, Adelphia engaged in extensive analysis of all such payments to determine if they could be avoided pursuant to certain provisions of the Code.
On April 20, 2004, Adelphia filed a motion seeking to abandon most of the potential actions to avoid the pre-petition payments because, among other reasons, (i) Adelphia believed that pursuing certain of such actions against parties with whom Adelphia was continuing to do business could have a significant adverse impact on important, ongoing business relationships, and (ii) the costs associated with pursuing such actions far outweighed any potential benefit to the Adelphia debtors estates that might otherwise result from bringing such actions. In response to certain objections to Adelphias motion, Adelphia amended its initial motion.
On May 27, 2004, the Bankruptcy Court entered an order tolling all claims to avoid inter-debtor payments and authorizing the abandonment of potential actions to avoid (i) transfers to taxing authorities; (ii) transfers to human resource providers engaged in business with Adelphia; (iii) transfers determined to have been made in the ordinary course of business; and (iv) certain transfers deemed de minimis. As to the remainder of the transfers made by Adelphia during the relevant one-year and ninety-day periods prior to the bankruptcy filing, Adelphia either (i) entered into tolling agreements with the transferee extending Adelphias time to initiate an action, or (ii) filed a complaint and initiated an adversary proceeding against the transferee.
As of June 25, 2004, Adelphia secured approximately 250 tolling agreements with various transferees, including members of the Rigas family, the Rigas family entities, former executives James Brown and Michael Mulcahey, and former directors Erland Kailbourne, Dennis Coyle, Leslie Gelber, and Peter Metros, among others. Certain of these tolling agreements have been amended from time to time. In addition, Adelphia filed approximately 150 complaints in the Bankruptcy Court commencing actions to avoid certain pre-petition transfers and payments. Some of those complaints have since been dismissed or resolved after further investigation.
On July 21, 2004, the Bankruptcy Court stayed all activity in the avoidance actions commenced by Adelphia and approved notice and service procedures in connection therewith.
At this time, the ART cannot predict the outcome of these proceedings or estimate the possible financial effect of these proceedings on the ARTs financial statements.
Tolled Causes of Action
Buchanan Ingersoll
On June 27, 2012, the ART announced that it had reached a settlement with Buchanan Ingersoll & Rooney PC (Buchanan), subject to the approval of the United States Bankruptcy Court. On July 18, 2012, the Bankruptcy Court entered an order approving the settlement. No objections or appeals were filed in the period allowed for appeals, and on August 1, 2012 the settlement became final. Buchanan served as Adelphias primary outside legal counsel for a number of years before Adelphia filed for bankruptcy protection in June 2002. Under the terms of the settlement, Buchanan made an initial payment of $20.0 million to the ART, which was released to the ART on August 3, 2012 and will be recorded under the terms of the ARTs revenue recognition policy, in the third quarter of 2012.
As part of the settlement, the ART agreed to participate with other parties that have asserted claims against Buchanan in a binding Alternate Dispute Resolution proceeding (the ADR Proceeding) in which an additional $40.0 million will be distributed. The ART will seek an award of a substantial portion, if not all, of the $40.0 million in the ADR Proceeding but at this time the ART cannot predict how much, if any, of the $40.0 million will be awarded to the ART or estimate the possible financial effect of the ADR Proceedings on the ARTs financial statements.
5 Fair Value of Financial Instruments
The ART invests in FDIC insured bank certificates of deposit (CDs). CD investments held by the ART as of December 31, 2011 matured in the first quarter of 2012. At maturity, the ART elected to re-invest in CDs with a maturity of 90 days or less when purchased. CDs with a maturity of 90 days or less when purchased are classified as cash and cash equivalents and those with a maturity exceeding 90 days are classified as temporary investments. The ART had no temporary investments as of June 30, 2012 or December 31, 2011.
The fair value of the note receivable and accrued interest has been determined using unobservable inputs (i.e. Level 3, as defined in Accounting Standards Codification 820-10) and approximates $5.6 million as of June 30, 2012 and $5.2 million as of December 31, 2011. The fair value was derived by discounting to June 30, 2012 and December 31, 2011 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 $6.8 million as of June 30, 2012 and approximately $6.6 million as of December 31, 2011. 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
On August 1, 2012, the Buchanan settlement became final under the terms of the settlement agreement because the appeal period expired with no appeals having been filed. In accordance with the ARTs revenue recognition policy, settlement proceeds will be recorded as revenue only after all objection and appeal periods have expired. Therefore, the ART will record the settlement as revenue in the third quarter of 2012.
Events subsequent to June 30, 2012 have been evaluated through August 9, 2012, the date the accompanying financial statements were issued. Other than the Buchanan settlement or as otherwise 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.
Managements Discussion and Analysis of Financial Condition and Results of Operations
Overview
The ART 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 $25.0 million in cash to the ART in connection with its formation in 2007 in order to fund the initial expenses of operation.
The ART is not subject to federal or state income taxes. The ART is not aware of any transactions or events up to and including June 30, 2012 that would subject it to federal or state income taxes. Further, the ART has no unrecognized income tax benefits as of June 30, 2012 nor are there any amounts required to be included in the financial statements for interest or penalties on unrecognized income tax benefits. Items of income, gain, loss, deduction and other tax items have been and will be allocated to the Holders that would be entitled to receive such items if they constituted cash distributions or reductions therefrom. The Holders are responsible for the payment of taxes on a current basis that result from such allocations whether or not cash is distributed.
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 December 31, 2014. 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 the 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. Previous Distributions occurred on December 21, 2010 for $215.0 million and on March 1, 2012 for $30.0 million in cash payable to Holders of Interests in the Trust in accordance with the waterfall priority established in the Plan. It is not possible to determine at this time if there will be future Distributions to the Holders of Interests in the Trust. No other Distributions are currently planned. As of June 30, 2012, the number of Interests outstanding in each series eligible to receive a Distribution is as follows:
CVV Series of Interest: |
|
As of June 30, 2012 |
|
Series RF (1) |
|
115,000,000 |
|
Series Arahova |
|
722,639,681 |
|
Series FrontierVision |
|
86,600,001 |
|
Series FPL |
|
25,575,129 |
|
Series Olympus |
|
17,000,001 |
|
Series ACC-1 |
|
4,839,988,165 |
|
Series ACC-2 |
|
339,207,075 |
|
Series ACC-3 |
|
119,430,302 |
|
Series ESL (2) |
|
17 |
|
Series ACC-4 |
|
1,790,968,272 |
|
Series ACC-5 (2) |
|
458 |
|
Series ACC-6B |
|
150,000,000 |
|
Series ACC-6B1 (2) |
|
3 |
|
Series ACC-6D |
|
575,000,000 |
|
Series ACC-6D1 (2) |
|
229,004 |
|
Series ACC-6E/F |
|
935,812,456 |
|
Series ACC-6E/F1 (2) |
|
277,210 |
|
Series ACC-7 |
|
217,022,640 |
|
Series ACC-7A (2) |
|
1,537,766,752 |
|
(1) Series RF Interests are outstanding but were paid in full with the March 1, 2012 Distribution and are not eligible for future Distributions.
(2) 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.
A schedule summarizing the Distribution priority waterfall as of June 30, 2012 is set forth below:
ART Distribution Waterfall Chart
June 30, 2012(1)
Remainig Aggregate Distribution (2) |
|
Distribution Description (3) |
|
ART Distribution Recipient |
| ||
|
|
RF Holders Paid In Full |
|
RF |
|
0.00 |
% |
|
|
|
Arahova |
|
0.00 |
% | |
|
|
|
ACC-1 |
|
0.00 |
% | |
|
|
|
Olympus |
|
0.00 |
% | |
|
|
|
FrontierVision |
|
0.00 |
% | |
|
|
|
ACC-2 |
|
0.00 |
% | |
|
|
|
ACC-3 |
|
0.00 |
% | |
0 |
|
|
FPL |
|
0.00 |
% | |
|
|
Until Series Olympus has received aggregate distributions of $16 million plus the Olympus Fees, plus accrued post-Effective Date dividends |
|
Arahova |
|
45.87 |
% |
|
|
|
ACC-1 |
|
42.73 |
% | |
|
|
|
Olympus |
|
5.00 |
% | |
|
|
|
FrontierVision |
|
2.50 |
% | |
|
|
|
ACC-2 |
|
2.25 |
% | |
|
|
|
ACC-3 |
|
0.90 |
% | |
0 - 356,000,000 |
|
|
FPL |
|
0.75 |
% | |
|
|
Until cumulative distribution is $1,165 million |
|
Arahova |
|
48.37 |
% |
|
|
|
ACC-1 |
|
45.06 |
% | |
|
|
|
FrontierVision |
|
2.50 |
% | |
|
|
|
ACC-2 |
|
2.37 |
% | |
|
|
|
ACC-3 |
|
0.95 |
% | |
356,000,001 - 920,000,000 |
|
|
FPL |
|
0.75 |
% | |
|
|
Until Series Arahova has received $625 million plus the Arahova Fees plus accrued post-Effective Date dividends |
|
ACC-1 |
|
76.60 |
% |
|
|
|
Arahova |
|
14.51 |
% | |
|
|
|
ACC-2 |
|
4.03 |
% | |
|
|
|
FrontierVision |
|
2.50 |
% | |
|
|
|
ACC-3 |
|
1.61 |
% | |
920,000,001 - 4,250,000,000 |
|
|
FPL |
|
0.75 |
% | |
|
|
Until Series FPL has received aggregate distributions of $6.2 million plus Default Interest, plus accrued post-Effective Date dividends (ACC-1 and ACC-3 paid in full) |
|
ACC-1 |
|
90.11 |
% |
|
|
|
ACC-2 |
|
4.74 |
% | |
|
|
|
FrontierVision |
|
2.50 |
% | |
|
|
|
ACC-3 |
|
1.90 |
% | |
4,250,000,001 - 4,839,000,000 |
|
|
FPL |
|
0.75 |
% | |
|
|
Until Series FPL has received aggregate distributions of $6.2 million plus Default Interest, plus accrued post-Effective Date dividends |
|
ACC-2 |
|
96.75 |
% |
|
|
|
FrontierVision |
|
2.50 |
% | |
4,839,000,001 - 4,883,000,000 |
|
|
FPL |
|
0.75 |
% | |
|
|
|
|
ACC-2 |
|
97.50 |
% |
|
|
Until the holders of Claims in Class ACC Notes and in Classes ACC Trade and ACC Other Unsecured have been paid in full including Case Contract Interest (ACC Notes) and Case 8% Interest (ACC Trade and ACC Other Unsecured) and accrued post-Effective Date dividends |
|
FrontierVision |
|
2.50 |
% |
|
| ||||||
|
|
|
|
|
|
|
|
4,883,000,001 - 4,891,000,000 |
|
Until Series FrontierVision has received aggregate distributions of $85 million plus 80% of the FrontierVision Fees, plus accrued post-Effective Date dividends |
|
FrontierVision |
|
100.00 |
% |
4,891,000,001 - 4,955,000,000 |
|
Until the additional distribution to the Series Arahova Interests equals $50 million plus accrued post-Effective Date dividends at a rate of 5% per annum |
|
Series Arahova |
|
100.00 |
% |
Not Quantifiable |
|
Until ESL holders have received Payment in Full of their Claims and Case 8% interest plus accrued post-Effective Date dividends |
|
|
|
|
|
Not Quantifiable |
|
Until ACC-4 holders have received the full amount of their Allowed Claims plus Case Contract Interest plus accrued post-Effective Date dividends |
|
|
|
|
|
Not Quantifiable |
|
Until ACC-5 holders have received the full amount of their Allowed Claims plus Case 8% interest plus accrued post-Effective Date dividends |
|
|
|
|
|
Not Quantifiable |
|
Until ACC-6 holders receive distributions in accordance with the relative priorities established by the Liquidation Preferences governing the shares of ACC Preferred Stock and the Bankruptcy Code |
|
|
|
|
|
Not Quantifiable |
|
Each ACC-7 holder is entitled to receive a pro rata share of any distributions remaining |
|
|
|
|
|
Capitalized terms used in this chart but not otherwise defined have the respective meaning given to them under the Plan.
(1) Remaining aggregate distributions and ART distribution percentages are as of June 30, 2012.
(2) Pursuant to the terms of the Plan, certain series of Interests are entitled to post-Effective Date dividends on certain amounts due to the corresponding class of claims. For purposes of calculating the reference amount on which post-Effective Date dividends accrue, the distribution of the True-Up Holdback is treated as if it occurred on the Effective Date. Remaining aggregate distributions have been reduced as a result of the $215 million cash distribution to certain CVV Holders as of December 21, 2010, the $30 million cash distribution on March 1, 2012 as well as distributions made by Adelphia for excess reserves and for refunds of reserves established for Settlement Party Fee Claims.
(3) Unless otherwise stated, post-Effective Date dividends accrue at a rate of 8.9% per annum.
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. The Trustees will retain enough cash in reserve to administer the ART and fund the prosecution of the Causes of Action.
Due to the nature of the ARTs operations both revenue and operating expenses may fluctuate between and among reporting periods caused by activities and results related to the Causes of Action.
Second Quarter 2012 vs Second Quarter 2011
Total revenues consisting solely of interest decreased to approximately $102,000 in the second quarter of 2012 from approximately $129,000 in the second quarter of 2011. The decrease of approximately $27,000 was caused by a reduction in average invested cash balances and a decrease in investment yields. There were no court approved settlements or related revenues for either the second quarter of 2012 or for the second quarter of 2011.
Total operating expenses for the ART decreased to approximately $2.5 million in the second quarter of 2012 from approximately $2.9 million in the second quarter of 2011. The cost decrease of approximately $0.4 million was caused by a decrease in general and administrative costs of approximately $13,000 and professional litigation costs of approximately $0.6 million offset by an increase in professional administrative costs of $0.2 million.
Professional litigation costs decreased by approximately $0.6 million in the second quarter of 2012 compared to the second quarter of 2011 due to decreased costs of $0.4 million related to the Bank Cause of Action, $0.4 million for the Buchanan Cause of Action and $0.2 million for the JV LIF Cause of Action. The decreases were offset by increased professional expenses of $0.1 million for the Prestige Cause of Action and $0.3 million related to the FPL Cause of Action which went to trial on April 30, 2012.
General and administrative costs decreased by approximately $13,000 in the second quarter of 2012 when compared to the second quarter of 2011. The ART experienced decreased costs of approximately $17,000 in the second quarter of 2012 for bank fees, insurance premiums, tax filing costs and communications costs and had offsetting increased costs of approximately $4,000 for other administrative costs between the same comparable periods.
Professional administrative costs increased by approximately $152,000 in the second quarter of 2012 compared to the second quarter of 2011. The increased costs in the second quarter of 2012 relate to legal support costs incurred by the ART to manage trust operations, administrative requirements, Cause of Action oversight and regulatory compliance.
As a result of the decrease in total revenues of approximately $27,000 and the decrease in total operating expenses of approximately $0.4 million in the second quarter of 2012 compared to the second quarter of 2011, the net loss of approximately $2.4 million for the quarter ended June 30, 2012 was approximately $0.4 million lower than the net loss for the quarter ended June 30, 2011.
Six months ended June 30, 2012 versus the six months ended June 30, 2011
Total revenues consisting solely of interest decreased to approximately $206,000 for the six months ended June 30, 2012 from approximately $266,000 for the six months ended June 30, 2011. The decrease of approximately $60,000 was caused by a reduction in average invested cash balances and a decrease in investment yields. There were no court approved settlements or related revenues for either the six months ended June 30, 2012 or the six months ended June 30, 2011.
Total operating expenses for the ART decreased to approximately $5.4 million for the six months ended June 30, 2012 from approximately $5.5 million for the six months ended June 30, 2011. The cost decrease of approximately $0.1 million was caused by a reduction in general and administrative costs of approximately $45,000 and professional administrative costs of approximately $0.1 million offset by an increase in professional litigation costs of approximately $28,000.
Professional litigation costs increased by approximately $28,000 for the six months ended June 30, 2012 compared to the six months ended June 30, 2011 due to increased professional expenses for the FPL Cause of Action which went to trial in the second quarter of 2012 and the Sabres Cause of Action. The increases were offset by decreased costs for the Bank Cause of Action, the Prestige Cause of Action, the JV LIF Cause of Action which was settled in the fourth quarter of 2011 and the Buchanan Cause of Action.
General and administrative costs decreased by approximately $45,000 for the six months ended June 30, 2012 when compared to the six months ended June 30, 2011. The ART experienced decreased costs of approximately $56,000 for bank fees, insurance premiums, tax filing costs and audit fees and had offsetting increased costs of approximately $11,000 for other administrative costs between the same comparable periods.
Professional administrative costs decreased by approximately $110,000 for the six months ended June 30, 2012 compared to the six months ended June 30, 2011. The decreased costs relate to decreased legal support costs incurred by the ART to manage trust operations, administrative requirements, Cause of Action oversight and regulatory compliance.
As a result of the decrease in total revenues of approximately $60,000 and the decrease in total operating expenses of approximately $0.1 million for the six months ended June 30, 2012 compared to the six months ended June 30, 2011, the net loss of approximately $5.2 million for the six months ended June 30, 2012 was approximately the same as the net loss for the six months ended June 30, 2011.
Financial Condition and Cash Flows: Liquidity
The ARTs sources of liquidity are from (a) the $25.0 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. The Trustees will retain sufficient cash to administer the ART and fund the prosecution of the Causes of Action.
Based upon cash and cash equivalent balances as of June 30, 2012 totaling approximately $37.8 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 ARTs ability to maximize recoveries from settlements.
The nature of the ARTs 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, 2012 of approximately $37.8 million are $34.7 million lower than as of December 31, 2011. This decrease is due to cash and cash equivalents used by financing activities totaling $30.0 million and by the use of cash and cash equivalents for operating activities totaling $4.7 million.
The use of cash by financing activities was caused by a Distribution to Holders which occurred in the first quarter of 2012 for $30.0 million. The $4.7 million use of cash by operating activities included a net loss for the six months ended June 30, 2012 of approximately $5.2 million and a decrease in accrued expenses of approximately $13,000 due to the timing of vendor payments. Other operating activities include the accrual of interest on a note receivable of approximately $0.2 million and the amortization of prepaid assets totaling $0.7 million for the six months ended June 30, 2012.
As of June 30, 2012, the ART has a total of $37.8 million of cash and cash equivalents which include investments in three-month or shorter FDIC fully-insured bank CDs in the amount of $10.0 million, a U.S. Treasury and government agency securities money market fund in the amount of $24.1 million and deposit accounts in the amount of $3.7 million. The ART considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. As such, the three-month CDs have been classified as cash
equivalents as of June 30, 2012. All investments during the quarter were fully compliant with the ART investment policy. The ART has adequate liquidity to meet its obligations as of June 30, 2012.
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, 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 9, 2012. 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 |
|
The ART invests cash 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 month or less maturity terms and as of June 30, 2012 the money market fund has a 49 day weighted average maturity for the underlying securities. Interest income from these investments is subject to interest rate fluctuations.
Item 4 |
|
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 SECs 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, 2012. Based on their evaluation, the Trustees and the Trust Administrator concluded that as of June 30, 2012, the ARTs disclosure controls and procedures were effective.
Limitations on the Effectiveness of Controls
The Trustees and the Trust Administrator do not expect that the ARTs 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 systems 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 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, 2012, there were no changes in the ARTs internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the ARTs internal control over financial reporting.
Causes of Action
Except as set forth below, there have been no material developments in the legal proceedings described in the ARTs Form 10-K as filed on March 9, 2012.
Pending Causes of Action
Goldman Sachs Litigation
On July 6, 2003, the Creditors Committee filed a complaint in the Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) against Adelphias pre-petition commercial banks and lenders, Adelphias former investment bankers and financial advisors, and assignees of Adelphias pre-petition bank debt (the Bank Litigation). On February 9, 2006, the United States District Court for the Southern District of New York (the District Court) granted a motion filed by certain defendants to withdraw the reference to the Bankruptcy Court.
The complaint included a claim for intentional fraudulent transfer against Goldman Sachs, Inc. arising from Adelphias pre-petition repayment of the Rigases personal margin loans in an amount of approximately $63 million. On May 6, 2009, the Court denied Goldman Sachs motion to dismiss. Goldman moved for summary judgment on March 2, 2010. Following argument in August 2010, Goldman supplemented its motion on November 12, 2010. On April 7, 2011, the District Court granted Goldmans summary judgment motion and judgment was entered on April 13, 2011. On May 6, 2011, the ART timely filed its notice of appeal to the Court of Appeals for the Second Circuit and subsequently filed an appeal. On April 25, 2012, the Second Circuit Court of Appeals heard oral argument on the appeal and took the case under advisement.
At this time, the ART cannot predict the outcome of the Goldman Sachs Litigation or estimate the possible financial effect of this proceeding on the ARTs financial statements.
FPL Litigation
On June 24, 2004, the Creditors Committee filed a fraudulent conveyance complaint against FPL Group, Inc. and West Boca Security, Inc. (collectively, FPL) in the Bankruptcy Court for the Southern District of New York relating to pre-petition transactions. The FPL action seeks to recover an alleged fraudulent transfer arising out of Adelphias repurchase of certain of its stock from FPL in January 1999 for $149.5 million. Pursuant to the Plan, the claims asserted in the FPL Litigation were transferred to the ART.
On July 13, 2011, the Bankruptcy Court denied FPLs motion for leave to amend its answer to add a new defense. FPL filed an appeal of the Bankruptcy Courts July 13, 2011 decision. FPLs appeal has been briefed by the parties and is under submission to the District Court. On September 28, 2011, FPL moved to withdraw the reference to Bankruptcy Court. The District Court denied FPLs motion to withdraw the reference on January 30, 2012. Trial began April 30, 2012 and testimony concluded on May 3, 2012. The parties submitted post-trial briefs on June 22, 2012. Closing arguments occurred on July 25, 2012.
At this time, the ART cannot predict the outcome of the FPL Litigation or estimate the possible financial effect of this proceeding on the ARTs financial statements.
Sabres Litigation
The Sabres action involves claims for fraudulent conveyance, aiding and abetting breach of fiduciary duty, and equitable subordination or disallowance against Key Bank, N.A. (Key Bank), Fleet
National Bank (Fleet), and HSBC Bank USA, N.A. (HSBC) (collectively, the Sabres Banks) arising from (i) Adelphias purchase of and payments on certain loans made by the Sabres Banks to a Rigas Family partnership that owned the Buffalo Sabres hockey team and (ii) John Rigas purchase of the team using Adelphia financing. HSBC has asserted counterclaims against Adelphia for post-petition tort, contribution and indemnification.
The District Court for the Western District of New York granted a permanent injunction against the ARTs prosecution of the fraudulent conveyance claims against the Sabres Banks and the Second Circuit affirmed that decision. The ARTs claims against Fleet were resolved as part of the settlement between the ART and Fleet and other defendants in the Bank Litigation.
On May 18, 2012, the Court dismissed the Trusts claims for aiding and abetting breach of fiduciary duty and equitable subordination or disallowance and HSBCs counterclaims. The Court entered judgment and dismissed the case on May 22, 2012. The ART determined to not appeal the decision.
Prestige Litigation
On June 24, 2004, the Creditors Committee filed an adversary action against Prestige Communications of NC, Inc., Jonathan J. Oscher, Lorraine Oscher McClain, Robert F. Buckfelder, Buckfelder Investment Trust, and Anverse, Inc. in the Bankruptcy Court for the Southern District of New York. In a decision dated January 8, 2008, the District Court withdrew the reference to the Bankruptcy Court in the Prestige action and transferred the case to the District Court.
The Prestige action seeks to recover fraudulent transfers in connection with Adelphias purchase of the assets of Prestige Communications of N.C., Inc., an acquisition that closed on July 5, 2000, as well as a claim that the owners of the Prestige Cable Systems aided and abetted breaches of fiduciary duty on the part of the Rigas family in connection with the transaction. Pursuant to the Plan, which became effective on February 13, 2007, the claims asserted in the Prestige Litigation were transferred to the ART.
On October 27, 2009, Defendants moved for summary judgment on the ARTs claims. On June 27, 2011, the District Court granted Defendants summary judgment motion and judgment was entered on June 28, 2011. The ART timely filed its notice of appeal to the Court of Appeals for the Second Circuit. The parties are briefing the appeal.
At this time, the ART cannot predict the outcome of the Prestige Litigation or estimate the possible financial effect of this proceeding on the ARTs financial statements.
Avoidance Actions
On July 31, 2003, Adelphia and its debtor affiliates filed with the Bankruptcy Court their Statements of Financial Affairs, which included a schedule of payments to insider entities made within one year prior to Adelphias filing for bankruptcy and payments to non-insider entities made within ninety days prior to Adelphias filing for bankruptcy. Subsequently, Adelphia engaged in extensive analysis of all such payments to determine if they could be avoided pursuant to certain provisions of the Code.
On April 20, 2004, Adelphia filed a motion seeking to abandon most of the potential actions to avoid the pre-petition payments because, among other reasons, (i) Adelphia believed that pursuing certain of such actions against parties with whom Adelphia was continuing to do business could have a significant adverse impact on important, ongoing business relationships, and (ii) the costs associated with pursuing such actions far outweighed any potential benefit to the Adelphia debtors estates that might otherwise result from bringing such actions. In response to certain objections to Adelphias motion, Adelphia amended its initial motion.
On May 27, 2004, the Bankruptcy Court entered an order tolling all claims to avoid inter-debtor payments and authorizing the abandonment of potential actions to avoid (i) transfers to taxing authorities; (ii) transfers to human resource providers engaged in business with Adelphia; (iii) transfers determined to have been made in the ordinary course of business; and (iv) certain transfers deemed de minimis. As to the remainder of the transfers made by Adelphia during the relevant one-year and ninety-day periods prior to the bankruptcy filing, Adelphia either (i) entered into tolling agreements with the transferee extending Adelphias time to initiate an action, or (ii) filed a complaint and initiated an adversary proceeding against the transferee.
As of June 25, 2004, Adelphia secured approximately 250 tolling agreements with various transferees, including members of the Rigas family, the Rigas family entities, former executives James Brown and Michael Mulcahey, and former directors Erland Kailbourne, Dennis Coyle, Leslie Gelber, and Peter Metros, among others. Certain of these tolling agreements have been amended from time to time. In addition, Adelphia filed approximately 150 complaints in the Bankruptcy Court commencing actions to avoid certain pre-petition transfers and payments. Some of those complaints have since been dismissed or resolved after further investigation.
On July 21, 2004, the Bankruptcy Court stayed all activity in the avoidance actions commenced by Adelphia and approved notice and service procedures in connection therewith.
At this time, the ART cannot predict the outcome of these proceedings or estimate the possible financial effect of these proceedings on the ARTs financial statements.
Tolled Causes of Action
Buchanan Ingersoll
On June 27, 2012, the ART announced that it had reached a settlement with Buchanan Ingersoll & Rooney PC (Buchanan), subject to the approval of the United States Bankruptcy Court. On July 18, 2012, the Bankruptcy Court entered an order approving the settlement. No objections or appeals were filed in the period allowed for appeals, and on August 1, 2012 the settlement became final. Buchanan served as Adelphias primary outside legal counsel for a number of years before Adelphia filed for bankruptcy protection in June 2002. Under the terms of the settlement, Buchanan made an initial payment of $20.0 million to the ART, which was released to the ART on August 3, 2012 and will be recorded under the terms of the ARTs revenue recognition policy, in the third quarter of 2012.
As part of the settlement, the ART agreed to participate with other parties that have asserted claims against Buchanan in a binding Alternate Dispute Resolution proceeding (the ADR Proceeding) in which an additional $40.0 million will be distributed. The ART will seek an award of a substantial portion, if not all, of the $40.0 million in the ADR Proceeding but at this time the ART cannot predict how much, if any, of the
$40.0 million will be awarded to the ART or estimate the possible financial effect of the ADR Proceedings on the ARTs financial statements.
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 ARTs Form 10-K for the year ended December 31, 2011 as filed with the SEC on March 9, 2102 or as updated in the ARTs Form 10-Q filed on May 11, 2012.
Item 6 |
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2.1* |
|
First Modified Fifth Amended Joint Chapter 11 Plan of Reorganization of Adelphia Communications Corporation and Certain of its Affiliated Debtors, effective February 13, 2007 | |
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| |
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3.1* |
|
Restated Certificate of Trust, dated February 13, 2007 | |
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| |
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3.2* |
|
Amendment to Restated Certificate of Trust, dated March 15, 2007 | |
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| |
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3.3* |
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Second Amended and Restated Declaration of Trust, dated June 4, 2008 | |
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| |
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3.4* |
|
Rules and Procedures of Adelphia Recovery Trust | |
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| |
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4.1* |
|
Form of Certificate Evidencing Undivided Beneficial Interests in the Assets of the Adelphia Recovery Trust (Global Certificate) | |
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| |
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4.2* |
|
Form of Certificate Evidencing Undivided Beneficial Interests in the Assets of the Adelphia Recovery Trust (Book Entry Certificate) | |
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| |
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10.1* |
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Plan Administrator Agreement, dated February 12, 2007 | |
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10.2* |
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Trustee Compensation Agreement | |
*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.
31.1 |
|
Section 302 Certification of Trustee |
31.2 |
|
Section 302 Certification of Trust Administrator |
32.1 |
|
Certification of Trustee pursuant to 18 U.S.C. 1350 Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 |
32.2 |
|
Certification Trust Administrator pursuant to 18 U.S.C. 1350 Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 |
101 |
|
The following materials from Adelphia Recovery Trusts Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, formatted in XBRL: (i) Condensed Balance Sheets (ii) Condensed Statements of Operations (iii) Condensed Statements of Cash Flows; and (iv) Notes to Condensed Financial Statements |
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.
Date: August 9, 2012 |
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By: Quest Turnaround Advisors, LLC |
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as Trust Administrator of the Adelphia Recovery Trust |
|
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/s/ Jeffrey A. Brodsky |
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Jeffrey A. Brodsky |
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Member |
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