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Adelphia Seeks to Keep Insurance

October 17, 2002

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PHILADELPHIA (AP) _ Bankrupt Adelphia Communications asked a judge Thursday to delay court action on a lawsuit by insurers seeking to revoke liability coverage for company founder John J. Rigas and other officers and directors.

Citing alleged fraud by Rigas and others, the insurers _ Associated Electric & Gas Insurance Services, Federal Insurance Co. and Greenwich Insurance Co. _ sought to rescind policies that provided $50 million in coverage for legal costs and other claims.

Adelphia filed a motion Thursday requesting an injunction to bar action on the insurers’ lawsuit until the Rigases other legal actions are resolved.

``It makes no sense for the (insurers’ request) to be the tail wagging the dog with respect to the litigation of issues relating to the Rigas family’s wrongdoing,″ the company said in its filing. Bankruptcy Judge Robert E. Gerber scheduled a hearing Oct. 31.

Adelphia’s founder and former chairman, John J. Rigas, 77; his sons, Timothy, 46, and Michael, 48; James R. Brown, 40, former vice president of finance; and Michael C. Mulcahey, 45, former director of internal reporting, were indicted by a federal grand jury in September on securities fraud, bank fraud and conspiracy charges.

Rigas and his sons, who have denied any wrongdoing, have also been named as defendants in more than 40 civil lawsuits, including one the company itself filed the day of their arrests.

Adelphia, based in Coudersport in rural northern Pennsylvania, filed for Chapter 11 bankruptcy protection June 25. The Rigases stepped down from their board seats and executive posts in May.

Adelphia said in its motion that the same issues the insurers raised about alleged wrongdoing by the Rigas family were central to the company’s bankruptcy proceeding, the federal prosecution and the company’s own lawsuit.

To proceed with the insurers’ lawsuit first would distract from Adelphia’s reorganization efforts, the motion said, and ``would cause confusion, interference, and the potential for inconsistent judgments.″

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