Adelphia Communications Corp. creditors asked a judge to cap the legal costs claimed by Bank of America Corp. (BAC:US) and other banks, saying they've wasted some of the $100 million already paid by the cable television company.
Adelphia, based in Greenwood Village, Colorado, shouldn't have to pay any more legal fees to the banks under loan agreements signed before its 2002 bankruptcy filing, the cable operator's committee of unsecured creditors said.
``The banks cannot be allowed the unfettered discretion they believe they have had,'' David Friedman, a lawyer for the creditors, said in papers filed yesterday in U.S. Bankruptcy Court in New York. ``The banks to date have wasted an enormous amount of money, incurring fees that are not reasonable.''
The creditor panel sued more than 400 banks in July 2003, alleging they helped Adelphia founder John Rigas defraud the company of more than $5 billion. The suit claims the primary vehicles for the fraud were syndicated loans drawn on by both Adelphia and private Rigas companies.
The lawsuit is pending. Rigas, 81, was convicted of federal fraud charges in July 2004.
The $100 million the banks received so far ``is more than adequate to pay the banks' reasonable expenses,'' Friedman said.
The bank group includes some of Adelphia's largest creditors, with $6.8 billion in total claims. Bank of America, the second-largest U.S. bank, filed a claim of about $2.5 billion in 2004.
Bank of Montreal (BMO), Canada's fourth-biggest bank by assets, filed a $1.3 billion claim that same year. Citigroup, the world's largest bank by market value, filed a $1 billion claim, according to court papers.
Adelphia proposes to fully repay the $6.8 billion under its plan to exit bankruptcy. The centerpiece of the plan is Adelphia's proposed $17.6 billion asset sale to Time Warner Inc. (TWX:US) and Comcast Corp. (CMCSA:US) U.S. Bankruptcy Judge Robert Gerber will consider approval of the plan in June.
Bank of America spokesman Terry Francisco declined to comment. Citigroup spokeswoman Shannon Bell and Bank of Montreal spokesman Ralph Marranca did not return calls seeking comment.
Adelphia filed the 11th-biggest bankruptcy by asset size in U.S. history in June 2002, listing $21.5 billion in assets and more than $18 billion in debt in court papers.
Shares of Adelphia were unchanged at 5 cents in over-the- counter trading. The company's 10.875 percent notes maturing in 2010 fell 1 cent to 49.4 cents on the dollar, according to Trace, the bond-price reporting system of the NASD.
The bankruptcy case is In re Adelphia Communications Corp., 02-41729, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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