Adelphia Communications Corp., the United States' sixth-largest cable provider , filed for bankruptcy protection late Tuesday, plagued by one of the biggest accounting scandals in corporate history.
The bankruptcy filing, one of the largest bankruptcies ever, has been expected for weeks after Adelphia revealed billions of dollars in off-the-books loans by the family of Adelphia's founder John J. Rigas.
Adelphia said late Tuesday it will continue to operate as usual in bankruptcy, while working on a plan of reorganization to restructure its debt and get back on track. The company is expected to downsize and sell assets to reduce debts.
The bankruptcy marks the speedy fall from grace of Rigas, 77, the folksy son of Greek immigrants who was known for refusing to offer adult-oriented TV channels in Los Angeles after purchasing systems in the city nearly three years ago.
Rigas became a paper billionaire by building Adelphia into cable powerhouse from the sleepy hamlet of Coudersport, Pa. Last month he was forced to relinquish control of the company he founded in 1952 with $300, after disclosures that he and his family borrowed $3 billion for private family partnerships that were backed by the cable company without the shareholders' knowledge.
Experts say customers could experience lapses in service as a result of Adelphia's reorganization efforts. "You could see some delays and interruptions in service if Adelphia downsizes, stops hiring, or if its employees get nervous and start leaving," said Ivan Kallick, a bankruptcy lawyer at Manatt, Phelps & Phillips in Los Angeles. "But you won't be watching Tom Brokaw and suddenly have your cable go out."
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