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HomeMy WebLinkAbout02-259 - Resolutions RESOLUTION NO. 02-259 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA SUPPORTING THE FORMATION OF A COALITION OF LOCAL GOVERNMENTAL ENTITIES TO PROTECT THE INTERESTS OF THE CITY AND ITS RESIDENTS DURING THE CHAPTER 11 BANKRUPTCY PROCEEDINGS INVOLVING ADELPHIA COMMUNICATIONS CORPORATION RECITALS: A. Adelphia Communications Corporation ("Adelphia") is a cable operator that provides cable service in the City under the authority of a cable television franchise. B. In recent months, Adelphia has been impacted by significant corporate and financial difficulties, including the disclosure of approximately $3.1 billion in previously undisclosed off-balance sheet obligations, the filing of a complaint by the Securities and Exchange Commission, the commencement of two federal grand jury investigations, allegations of widespread corporate fraud, substantial defaults on bondholder debts, numerous shareholder lawsuits, and the arrest of five former corporate executives. C. On June 25, 2002, Adelphia, and more than two hundred of its subsidiaries, filed for bankruptcy protection. D. Recent press reports indicate that Adelphia attempted to sell many of its franchises to other cable operators within the two-week period preceding the bankruptcy filing, but those negotiations failed. E. Recent press reports indicate that Adelphia has obtained $1.5 billion in debtor-in-possession financing to continue its cable operations while the bankruptcy is pending. F. In the course of the bankruptcy proceedings, Adelphia will be required to assume or to reject the current franchise agreement with the City, and during that process the City should play an active role to ensure that all franchise obligations are satisfied and that the City's cable television subscribers receive uninterrupted cable television services of the highest quality. G. Complicated issues are expected to arise during the course of the bankruptcy that will require: (i) extensive analysis of the rights and obligations of local governments; (ii) preparation of financial documents and reports explaining the practical ramifications of various proposals that may arise, including debt and equity restructurings; and (iii) attention to the protection of the public health, safety, and welfare, as well as the quality and scope of cable television services that are provided. -7 Resolution No. 02-259 Page 2 of 4 H. The bankruptcy proceedings may result in tension between the following affected parties: local franchising authorities, which are authorized to manage public rights-of-way and to protect subscribers; Adelphia's creditors, which desire to obtain maximum value from Adelphia's franchises with minimum delay; potential asset purchasers, which desire to pay the lowest possible price and to incur minimum obligations when seeking to buy cable franchises from the bankruptcy estate; and the bankruptcy court, which desires to quickly administer the case and to confirm a bankruptcy plan of reorganization. I. Press reports and other information indicate that Adelphia's management, as well as Adelphia's major creditors, are currently developing their respective bankruptcy strategies and forming their committees, none of which is likely to align with the fundamental objectives of local government with respect to cable television franchises. J. By forming a coalition, local governments can present a united front in the bankruptcy case, thereby enabling local governments to exert more influence over the ultimate terms and conditions under which Adelphia, or some other cable operator, will provide cable services to subscribers on a going-forward basis. K. Bankruptcy law provides, in some circumstances, for the formation of committees that are comprised of parties sharing similar interests in the bankruptcy proceeding. L. If an official committee comprised of local governmental entities were appointed by the United States Trustee, the professional fees incurred by the committee would be paid by the bankruptcy estate. M. On July 12, 2002, the Executive Director of the National Association of Telecommunications Officers and Advisors ("NATOA"), and the President of the States of California and Nevada Chapter of NATOA ("SCAN/NATOA") sent a letter to Adelphia's General Counsel requesting that Adelphia support the United States Trustee's appointment of a local governmental committee. N. On July 31, 2002, the County of St. Port Lucie, Florida, filed a motion in the U.S. Bankruptcy Court for the Southern District of New York requesting the creation of an official committee of local franchising authorities, and a hearing date that was originally set for September 17, 2002, has been continued to October 9, 2002. O. On August 15, 2002, Adelphia's General Counsel responded to the letter from NATOA and SCAN/NATOA and stated that Adelphia would remain neutral and would neither support nor oppose the formation of a local governmental committee. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA RESOLVES AS FOLLOWS: Resolution No. 02-259 Page 3 of 4 SECTION 1: Based upon the information set forth above in the Recitals, the City Council finds and determines that the City will benefit from its participation in a coalition of cities, counties, and special districts that would act as the local governmental committee in the bankruptcy proceedings, and would strive to protect the interests of local franchising authorities and their cable television subscribers who are impacted by the Adelphia bankruptcy. SECTION 2: The City Council expresses its support for the appointment by the United States Trustee of an official committee of local governmental entities. SECTION 3: The City Council authorizes the City's participation in the event an official committee of local governmental entities is appointed by the United States Trustee. SECTION 4: The City Clerk is directed to transmit a certified copy of this resolution to the following person: Mr. Joe Hreha, Deputy Director Community Services Department City of Simi Valley 2929 Tapo Canyon Road Simi Valley, CA 93063 SECTION 5: The City Clerk is directed to certify to the passage and adoption of this resolution. Please see the following page for formal adoption,certification and signatures Resolution No. 02-259 Page 4 of 4 PASSED, APPROVED, AND ADOPTED this 18th day of September 2002. AYES: Alexander, Biane, Curatalo, Dutton, Williams NOES: None ABSENT: None ABSTAINED: None GGl William J. Alex der, Mayor ATTEST: Cff Kath n L. colt, e uty ity Clerk I, KATHRYN L. SCOTT, DEPUTY CITY CLERK of the City of Rancho Cucamonga, California, do hereby certify that the foregoing Resolution was duly passed, approved and adopted by the City Council of the City of Rancho Cucamonga, California, at a Regular Meeting of said City Council held on the 18th day of September 2002. Executed this 19th day of September 2002, at Rancho Cucamonga, California. a- Mryn L. cot , eputy City Clerk