Adelphia Business Solutions files Chapter 11

Seeking protection from debtors in a crushing telecommunications business space, Adelphia Business Solutions has filed for Chapter 11 bankruptcy. ABIZ listed debts of $882.5 million and assets of $222.6 million. Major creditors include the Bank of New York and Sprint.

ABIZ, which is restructuring to try to meet its financial commitments, spun off in January from Adelphia Communications, a cable company under the tight control of the Rigas family in Coudersport, Pa. Both Adelphia as a company and the Rigas family have agreed to provide ABIZ with debtor-in-possession financing of up to $135 million to continue day-to-day operations while it reorganizes.

Concurrent with the bankruptcy announcement, Adelphia Communications released fourth quarter and year-end results that reflected a fourth-quarter loss of $1.33 billion, after writing down the value of ABIZ’s spun out business.

Adelphia CFO Timothy Rigas touched on the ABIZ bankruptcy, but noted that “ABIZ is no longer a subsidiary, and we cannot comment any longer on what it intends to do or achieve or what may happen in its reorganization proceeding which has just commenced and is obviously at a preliminary stage.”

Adelphia Communications share price increased 61 cents per share today on news of increased sales and the bankruptcy of the spun-off unit, which had been a sore spot with the company for some time.

The financial support proffered to ABIZ had been on the table for some time, said Rigas.

“Following the spin-off and prior to the bankruptcy filing, we had advanced approximately $35 million to the ABIZ subsidiary,” Rigas said. “We previously stated we might provide up to $100 million of additional credit support.”