Adelphia Wants Court Approval for Worker Payments

September 11, 2002 ( - With employee layoffs around the corner, Adelphia Business Solutions Inc. has asked a judge's OK to pay $3.6 million in retention and severance to some employees.

In papers filed with the US Bankruptcy Court in Manhattan where Adelphia’s Chapter 11 reorganization case is pending, the telecommunications company said the program rewards employees for helping during the bankruptcy proceedings and contributing to employee morale, a Dow Jones news story reported.

Adelphia needs the approval of US Bankruptcy Judge Robert Gerber. Gerber has scheduled a September 17 hearing on the issue.

Adelphia recently opted to slash its operations and workforce in light of the telecommunications industry’s downturn.

Plan Details
The Dow Jones story reported these details of the plan from court papers:

Adelphia estimates that 807 employees will be eligible for severance payments as a result of the planned workforce reductions. Under the company’s proposed severance plan, the total cost to the company would be about $922,000.

The company also estimates that $121,000 in bonuses would be paid to about 145 of these employees for providing transitional services to complete the orderly shutdown of closed and mothballed markets.

The company said the plan would reduce the number of weeks of severance payments to which some employees might otherwise be entitled. Historically, the company said it paid monthly severance payments for a period ranging between three and 26 weeks, depending on length of service.

The proposed retention plan would split $900,000 among 18 employees who have been identified as critical or key to the company’s business and restructuring. Each employee would be entitled to $120,000 or 20% to 50% of salary, which would be paid over time in three installments.

The plan also sets aside $200,000 for select general managers. These employees could receive up to $20,000 when a reorganization plan for the company goes into effect.

Adelphia Business has also sought approval to pay $1.2 million in quarterly and year-end bonuses owed to 64 employees since March 27. Adelphia said the bonuses are a regular component of certain employees’ compensation.

The company seeks court approval to pay up to $200,000 in bonuses for employees hired after October 1. Individual bonuses would be capped at $15,000.

The issue of severance payments has also bubbled over recently at WorldCom.