Charter 2009 Annual Report Download - page 87

CCH II, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009, 2008, AND 2007
(dollars in millions, except where indicated)
F-39
Litigation
On August 28, 2008, a lawsuit was filed against Charter and Charter Communications, LLC (“Charter LLC”) in the
United States District Court for the Western District of Wisconsin (now entitled, Marc Goodell et al. v. Charter
Communications, LLC and Charter Communications, Inc.). The plaintiffs seek to represent a class of current and
former broadband, system and other types of technicians who are or were employed by Charter or Charter LLC in
the states of Michigan, Minnesota, Missouri or California. Plaintiffs allege that Charter and Charter LLC violated
certain wage and hour statutes of those four states by failing to pay technicians for all hours worked. Although
Charter and Charter LLC continue to deny all liability and believe that they have substantial defenses, on March 16,
2010, the parties tentatively settled this dispute subject to court approval. The Company has been subjected, in the
normal course of business, to the assertion of other wage and hour claims and could be subjected to additional such
claims in the future. The Company cannot predict the outcome of any such claims.
On March 27, 2009, Charter filed its chapter 11 Petition in the United States Bankruptcy Court for the Southern
District of New York. On the same day, JPMorgan Chase Bank, N.A., (“JPMorgan”), for itself and as
Administrative Agent under the Charter Operating Credit Agreement, filed an adversary proceeding (the “JPMorgan
Adversary Proceeding”) in Bankruptcy Court against Charter Operating and CCO Holdings seeking a declaration
that there have been events of default under the Charter Operating Credit Agreement. JPMorgan, as well as other
parties, objected to the Plan. The Bankruptcy Court jointly held 19 days of trial in the JPMorgan Adversary
Proceeding and on the objections to the Plan.
On November 17, 2009, the Bankruptcy Court issued its Order and Opinion confirming the Plan over the objections
of JPMorgan and various other objectors. The Court also entered an order ruling in favor of Charter in the
JPMorgan Adversary Proceeding. Several objectors attempted to stay the consummation of the Plan, but those
motions were denied by the Bankruptcy Court and the U.S. District Court for the Southern District of New York.
Charter consummated the Plan on November 30, 2009 and reinstated the Charter Operating Credit Agreement and
certain other debt of its subsidiaries.
Six appeals were filed relating to confirmation of the Plan. The parties initially pursuing appeals were: (i)
JPMorgan; (ii) Wilmington Trust Company (“Wilmington Trust”) (as indenture trustee for the holders of the 8%
Senior Second Lien Notes due 2012 and 8.375% senior second lien notes due 2014 issued by and among Charter
Operating and Charter Communications Operating Capital Corp. and the 10.875% senior second lien notes due 2014
issued by and among Charter Operating and Charter Communications Operating Capital Corp.); (iii) Wells Fargo
Bank, N.A. (“Wells Fargo”) (in its capacities as successor Administrative Agent and successor Collateral Agent for
the third lien prepetition secured lenders to CCO Holdings under the CCO Holdings credit facility); (iv) Law
Debenture Trust Company of New York (“Law Debenture Trust”) (as the Trustee with respect to the $479 million in
aggregate principal amount of 6.50% convertible senior notes due 2027 issued by Charter which are no longer
outstanding following consummation of the Plan); (v) R2 Investments, LDC (“R2 Investments”) (an equity interest
holder in Charter); and (vi) certain plaintiffs representing a putative class in a securities action against three Charter
officers or directors filed in the United States District Court for the Eastern District of Arkansas (Iron Workers Local
No. 25 Pension Fund, Indiana Laborers Pension Fund, and Iron Workers District Council of Western New York and
Vicinity Pension Fund, in the action styled Iron Workers Local No. 25 Pension Fund v. Allen, et al., Case No. 4:09-
cv-00405-JLH (E.D. Ark.).
Charter Operating is in the process of amending its senior secured credit facilities which it expects to close by March
31, 2010 and upon the closing of these amendments, each of Bank of America, N.A. and JPMorgan, for itself and on
behalf of the lenders under the Charter Operating senior secured credit facilities, has agreed to dismiss the pending
appeal of the Company’ s Confirmation Order pending before the District Court for the Southern District of New
York and to waive any objections to the Company’ s Confirmation Order issued by the United States Bankruptcy
Court for the Southern District of New York. On December 3, 2009, Wilmington Trust withdrew its notice of
appeal. On March 26, 2010, the Company was informed by counsel for Wells Fargo that Wells Fargo intends to
dismiss its appeal on behalf of the lenders under the CCO Holdings credit facility. Law Debenture Trust and R2
Investments have filed their appeal briefs. The schedule for the securities plaintiffs to file their appeal briefs has not
yet been established. The Company cannot predict the ultimate outcome of the appeals.