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September 27, 2005.


The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge


M47 (SAS)

  The Ad Hoc Committee of Arahova Noteholders ("Arahova Committee") requests leave to file an expedited appeal from four orders of the Bankruptcy Court of the Southern District of New York in the jointly administered chapter 11 cases of Adelphia Communications Corp. ("ACC") and more than 200 of its direct and indirect subsidiaries.*fn1 The Orders relate to a process established by the Bankruptcy Court to resolve certain disputes as an adjunct to confirmation of the debtors' joint plan of reorganization. The Arahova Committee also moves for a stay of the Orders pending resolution of the appeal. The debtors, the Ad Hoc Committee of ACC Senior Noteholders, and the Official Committee of Equity Security Holders*fn2 oppose the motions on the grounds that the Orders are interlocutory and that the circumstances do not merit the exercise of this Court's discretionary jurisdiction. For the following reasons, the Arahova Committee's motions for leave to appeal and for a stay pending appeal are denied.


  The dollar figures in this dispute are high, the issues are complex, and the deadlines are short. The debtors, formerly the fifth largest cable company in the United States, filed for chapter 11 protection in June 2002.*fn3 More than three billion dollars in claims have since been asserted against their estates.*fn4 In April 2005, the debtors agreed to a sale of assets to Time Warner NY Cable LLC and Comcast Corporation for approximately $17.6 billion.*fn5 If the Time Warner/Comcast sale does not close by July 31, 2006, the debtors stand to lose the purchase price, and may be required to pay a "break-up" fee of $440 million.*fn6 A condition of the closing is timely confirmation of the debtors' plan of reorganization by the Bankruptcy Court.*fn7

  The debtors' plan of reorganization proposes that the proceeds from the sale be distributed to creditors of nine groups of substantively consolidated debtors.*fn8 Claims against debtors in all but two of these groups will be paid in full.*fn9 The percentage of recovery on claims against the groups including debtors ACC and Arahova Communications, Inc. ("Arahova") are uncertain.*fn10 Members of the Ad Hoc Committee of Arahova Noteholders hold, or advise holders of, $550 million in senior notes issued by Arahova.*fn11 Member of the Ad Hoc Committee of ACC Senior Noteholders hold, or advise holders, of, $1.7 billion in Senior Notes issued by ACC.*fn12 The resolution of issues regarding inter-debtor claims, allocation of value from the sale transactions among debtors, allocation of liabilities to the debtors, and substantive consolidation of debtors, will affect the ultimate recoveries of these noteholders.*fn13

  To correct accounting irregularities, the debtors have restated approximately seven million lines of inter-debtor transactions on their financial statements.*fn14 These restatements are reflected on the debtors' schedules of intercompany liabilities, amended in May, 2005.*fn15 On June 16, 2005, the Arahova Committee filed its Motion to Strike, which sought an order striking the intercompany schedules.*fn16 The Arahova Committee argued that the intercompany balances listed on the schedules were disputed claims, and that the schedules did not comply with the formal requirements for claims under the Bankruptcy Rules.*fn17

  On June 24, 2005, the debtors filed their Motion in Aid, which proposed a set of procedures to resolve inter-debtor issues as an adjunct to the plan confirmation process, including discovery obligations, deadlines, dates for briefing, and hearings to adjudicate inter-debtor issues.*fn18 In the Motion in Aid, the debtors took no position on any particular inter-debtor issue, but rather, turned resolution of disputes over to affected creditor bodies.*fn19

  On July 2, 2005, the Arahova Committee filed its Standing Motion, seeking authority to prosecute certain avoidance actions of inter-debtor transactions on behalf of the debtor Arahova.*fn20 The Arahova Committee estimates that these claims are worth between $1.5 and $2 billion to the Arahova estate.*fn21 The Arahova Committee argues that participation as a debtor has advantages over participation as a creditor, including access to privileged information, the ability to hire professionals paid by the estate, and entitlement to an appeal without posting a bond.*fn22

  On July 12, 2005, the Bankruptcy Court held a hearing at which counsel to the Arahova Committee argued that the Motion in Aid was inadequate because "somebody performing fiduciary duties for the benefit of each estate is elemental and fundamental to the success of the chapter 11 process."*fn23 Judge Gerber requested that the parties address the question of "whether the estate needs more fiduciaries" at a hearing to be held on July 26, 2005.*fn24

  On July 21, 2005, the Arahova Committee objected to the Motion in Aid and proposed an alternative order which required that each debtor identify and assert claims and defenses in the inter-debtor disputes, that each of the over 200 debtor estates appoint at least one independent fiduciary, and that each conflicted debtor be represented by separate counsel.*fn25

  On July 22, 2005, the Arahova Committee filed its Motion to Compel, which sought to compel responses to requests for discovery in connection with the Motion in Aid and the Motion to Strike.*fn26 The debtors objected that these discovery requests required production of the very documents that the discovery plan contained in the Motion in Aid was intended to address.*fn27 On July 25, 2005, the Bankruptcy Court denied the Motion to Compel.

  On July 26, 2005, the Bankruptcy Court held a hearing on In re Adelphia which commenced at 9:45 a.m. and did not conclude until approximately 8:30 p.m.*fn28 The Bankruptcy Court heard argument on the Motion in Aid from numerous parties in interest.*fn29 At the close of the hearing, the Bankruptcy Court granted the Motion in Aid, with certain modifications, and denied the Arahova Committee's Motion to Strike and Standing Motion.*fn30 The Bankruptcy Court reasoned that the process established by the Order in Aid would provide a full opportunity for the Arahova Committee to address the matters raised in the Standing Motion and the Motion to Strike.*fn31

  The Arahova Committee now seeks leave to appeal, arguing that the procedures established by the Bankruptcy Court to resolve the inter-debtor issues contravene the provisions of the Bankruptcy Code by failing to require that each debtor-in-possession be charged with fiduciary duties to maximize value for its respective creditors.*fn32 Oral argument on this motion was held on September 20 and 21, 2005. At oral argument, the Arahova Committee also argued that certain of the Orders were final orders, which may be appealed as of right.*fn33


  A. Final Orders

  The district courts are vested with appellate jurisdiction over bankruptcy court rulings.*fn34 Final orders of the bankruptcy court may be appealed to the district court as of right.*fn35 In In re Palm Coast, Matanza Shores Limited, the Court of Appeals held that an order is final if "nothing in the order . . . indicates any anticipation that the decision will be reconsidered."*fn36 "A bankruptcy court's order is `final' if it `completely resolve[s] all of the issues pertaining to a discrete claim, including issues as to the proper relief.'"*fn37

  Courts have held that a bankruptcy court order is final if it confirms a plan, denies relief from an automatic stay, authorizes a sale of property, allows an extension of credit, or approves the assumption or assignment of an executory contract or an unexpired lease.*fn38 An order approving a disclosure statement is not final because "the alleged inadequacies of the disclosure may change or be rendered moot" depending on how the bankruptcy court resolves the issues at the "heart" of the objecting party's concerns.*fn39 Orders determining the appointment of professionals in a bankruptcy case are final. The Second Circuit has held that bankruptcy court orders granting or denying motions to disqualify counsel are final.*fn40 Similarly, orders granting or denying appointment of a trustee in a bankruptcy case are final.*fn41 By contrast, an order denying a motion for ...

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