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Tuesday, Aug. 24, 2004

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  Adelphia also wants the court to create a constructive trust that would confiscate any money or property, including cable systems, that the Rigases obtained from the use of Adelphia funds or credits, to make them property of the company's estate.

A hearing on Adelphia's repayment demands has been scheduled for Oct. 22 in the U.S. Bankruptcy Court in Manhattan. Objections are due by Sept. 17.

Sources familiar with the case told Dow Jones Newswires that the lawsuit against the Rigases stems from statements they made during the criminal trial, saying the family intended to pay the company back.

In July, a jury convicted Adelphia founder John Rigas and his son Timothy on criminal charges that they looted the cable company and deceived investors about its finances. Another executive was acquitted, and the case against Michael Rigas was declared a mistrial on numerous counts. He was acquitted on others.

During the criminal trial, testimony revealed that from Dec. 31, 1998, to April 30, 2002, the Rigases recognized about $3.2 billion in debt as their own, court papers said.

In court papers filed on Adelphia's behalf, the company alleges the Rigases were unjustly enriched through the purchase of securities, the acquisition of cable companies, cash disbursements to Rigas-owned entities such as the family's privately held cable companies, and other financial transactions performed with Adelphia funds.

Sources familiar with the case told Dow Jones Newswires that the Rigases principal assets comprise family-owned cable companies that list a few hundred thousand subscribers, Adelphia securities and property valued as high as $20 million.

Court papers filed by Adelphia said that a key aspect of the family's defense was that any debt or funds used from the company were "borrowed" not stolen, "and they intended to fully repay the amounts."

Now Adelphia wants the Rigases to make good on their promises. "The Rigases haven't repaid the company the amounts it is owned, and "in short, the Rigases have been unjustly enriched while Adelphia has suffered."

Rigas attorney Lawrence McMichael said, "We don't deny that the money was borrowed. These are limited loans, and if the loans are not repaid, then the creditors have a right to collect on those loans."

McMichael said the money in question wasn't directly borrowed from Adelphia, but from various banks, and payments are due in 2007 and 2008.

"The last time I looked it was only 2004, and we have a few years to work out a repayment strategy," said McMichael of Dilworth Paxson LLP, who serves as lead civil defense counsel for the Rigases.

McMichael said the Rigases aren't one "monolithic entity" and can't be lumped together in connection with their debts, suggesting that members of the Rigas family aren't equally liable for debts.

Greenwood Village, Colo.-based Adelphia is the nation's fifth-largest cable provider.

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