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A bankruptcy court judge Dec. 11 approved At Home Corp.’s $355 million agreement to provide transitional services for most of the Internet company’s high-speed Internet partners. The deal was brought Friday to the Northern District of California bankruptcy court for review. Judge Thomas Carlson asked At Home to clarify the agreement after attorneys for bondholders questioned whether it would rule out prospective legal action against two of At Home’s largest cable partners, Cox Communications Inc. of Atlanta and Comcast Corp. of Philadelphia. Bondholders, who are owed roughly $750 million by At Home, raised no further objections Tuesday to the deal. William Weintraub, an attorney with Los Angeles law firm Pachulski, Stang, Ziehl, Young & Jones who represents bondholders, said Cox and Comcast could still be held liable for breach of fiduciary agreements the companies had as former shareholders of At Home. Tuesday’s agreement does waive any future claims against Cox and Comcast for building their own broadband networks as alternatives to At Home’s network and for allegedly undercharging for the Internet company’s services. Excluded from the court-sanctioned agreement is AT&T Corp. of New York, which is moving customers to its own broadband network after At Home cut off its service Dec. 1. AT&T had voting control over At Home when it announced bankruptcy in September and was its largest customer. Creditors are expected to sue AT&T on several legal fronts, including its role in the demise of At Home and whether it violated its fiduciary duties before the company filed for bankruptcy; whether AT&T, as the controlling shareholder in At Home, had inside information on the value of the broadband assets before it offered to buy it in September; and whether the telecom violated its fiduciary duty by building its own network, thus reducing the value of At Home’s network. According to an attorney for one of the creditors’ committees, depositions of At Home board members and officials taken in conjunction with the bankruptcy hearing provided insight that will eventually lead to further legal action against AT&T. “What makes this situation unusual is that the painstaking efforts to keep things squeaky clean were not taken,” the attorney said. Also Tuesday, Carlson denied a request from At Home allowing it to continue to retain Houlihan Lokey Howard & Zukin Capital of Los Angeles as its financial adviser. Attorneys for bondholders and creditors objected to At Home’s retaining the company, which was charging $200,000 a month for its services. The New York-based company can still apply to be financial adviser, but the bondholders’ and unsecured creditors’ committees must approve any employment contract. The court also ruled that Houlihan is not immune from any litigation arising from its recommendation that At Home accept AT&T’s $307 million bid for the broadband network. Weintraub argued that the deal “was a bad transaction” and wanted to leave open whether Houlihan could one day be sued. Weintraub also recommended that At Home retain PricewaterhouseCoopers as a financial adviser. Copyright (c)2001 TDD, LLC. All rights reserved.

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