Charter 2010 Annual Report Download - page 122

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F- F-PB
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010, 2009, AND 2008
(dollars in millions, except share or per share data or where indicated)
e Company also has $73 million in letters of credit, primarily
to its various worker’s compensation, property and casualty, and
general liability carriers, as collateral for reimbursement of claims.
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.). e plaintiffs sought 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
alleged that Charter and Charter LLC violated certain wage and
hour statutes of those four states by failing to pay technicians for all
hours worked. In May 2010, the parties entered into a settlement
agreement disposing of all claims, including those potential wage and
hour claims for potential class members in additional states beyond
the four identified above. On September 24, 2010, the court granted
final approval of the settlement. e Company accrued and paid
expected settlement costs associated with this case. e 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. e 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 were
events of default under the Charter Operating Credit Agreement.
JPMorgan, as well as other parties, objected to the Plan. e
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. e 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. e
parties initially pursing 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 former 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 amended its senior secured credit facilities
effective March 31, 2010. In connection with 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, 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. e lenders filed their Stipulation of that dismissal and waiver
of objections and it was signed by the judge on April 1, 2010 and the
case dismissed. On December 3, 2009, Wilmington Trust withdrew
its notice of appeal. On April 14, 2010, Wells Fargo filed their
Stipulation of Dismissal of their appeal on behalf of the lenders under