October 22, 2010 / 7:43 PM / 9 years ago

Adelphia trust in $175 mln settlement with banks

* More than 20 banks settle

* Banks allegedly helped Rigas loot company

* Settlement averts trial

NEW YORK, Oct 22 (Reuters) - More than 20 banks have agreed to pay $175 million to settle a lawsuit by an Adelphia Communications Corp trust that accused them of helping the cable television provider’s founder loot the company.

The proposed settlement was filed this week in Manhattan federal court. It resolves claims that the banks were grossly negligent and breached their fiduciary duties by arranging financings that allowed Adelphia founder John Rigas and his son Timothy to defraud the company.

Settling defendants include Bank of America Corp (BAC.N), Citigroup Inc (C.N), Credit Suisse Group AG CSGN.VX, Deutsche Bank AG (DBKGn.DE), JPMorgan Chase & Co (JPM.N), Toronto Dominion Bank (TD.TO), Wells Fargo & Co (WFC.N) and others.

The settlement averts a trial slated to begin on Oct. 25.

U.S. District Judge Lawrence McKenna set a Nov. 18 hearing to review the accord, which was negotiated with a mediator.

Once the fifth-largest U.S. cable TV provider, Adelphia went bankrupt in July 2002.

John Rigas is serving 12 years in prison and Timothy Rigas is serving 15 years. A federal jury in New York convicted them in 2004 of looting Adelphia and hiding its weak financial condition.

The Adelphia trust was created under the company’s reorganization plan to pursue claims on Adelphia’s behalf. Money that is recovered can go to creditors who say they are still owed billions of dollars.

The case is Adelphia Recovery Trust v. Bank of America NA et al, U.S. District Court, Southern District of New York, No. 05-9050. (Reporting by Jonathan Stempel in New York, editing by Dave Zimmerman)

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