Pittsburgh's Buchanan Ingersoll & Rooney has agreed to pay $60 million to settle claims in the bankruptcy of its former client, Adelphia Communications Corp.
Buchanan Ingersoll, a firm with about 415 lawyers, and its insurers will pay an initial $20 million to the Adelphia Recovery Trust, which is pursuing claims on behalf of creditors.
The firm and its insurers will also pay $40 million to be distributed in a binding mediation proceeding among the trust and other parties with claims against Buchanan Ingersoll, according to court papers recently filed in the U.S. Bankruptcy Court for the Southern District of New York. The trust will seek a substantial portion, if not all, of the $40 million.
The Pennsylvania-based cable TV company filed for bankruptcy in 2002 after disclosing $2.3 billion in off-balance-sheet debt. John Rigas, the founder, president and CEO of the company, and his son, Timothy Rigas, were subsequently convicted of bank fraud and securities fraud in an accounting scandal. John Rigas is serving a 12-year-prison sentence and Timothy Rigas is serving 17 years.
Buchanan Ingersoll served as Adelphia's primary outside legal counsel for a number of years, including in transactions involving the company and the Rigas family, according to court documents.
"Several of those transactions are alleged to have enabled the Rigas family to loot tens and even hundreds of millions of dollars from the debtors," according to the motion for an order approving the settlement filed in late June.
Since Adelphia's bankruptcy filing, groups of holders of securities in Adelphia Communications have sued the firm in various courts, the motion said.
As part of the settlement, the trust and Buchanan Ingersoll agree to mutual releases from claims. Both the firm and the trust denied wrongdoing, saying the settlement was motivated by a desire to avoid the expense and burden of litigation.
The settlement is subject to the approval of U.S. Bankruptcy Judge Robert Gerber.
Tracie Gliozzi, a spokeswoman for the law firm, said: "Agreeing to settle the matter allows us to focus on our clients and our goals. We are pleased to put this behind us."
The trust is represented by David Friedman, a partner at Kasowitz, Benson, Torres & Friedman.legalnews
Christine Simmons is a reporter for the New York Law Journal, a Legal Intelligencer affiliate.