AT&T settled a lawsuit brought by the Excite@Home Bondholders’ Liquidating Trust regarding claims arising out of AT&T’s former position as At Home’s controlling shareholder. The settlement, which is subject to approval by the United States Bankruptcy Court in San Francisco, will result in the Trust receiving $400 million. The settlement consists of a $340 million payment from AT&T and the release of $60 million in reserves established for the benefit of AT&T in the Excite@Home bankruptcy.
Comcast will pay AT&T Corp. $170 million to reimburse it for Comcast’s portion of AT&T’s settlement. Pursuant to the terms of its acquisition of AT&T Broadband from AT&T, Comcast is contractually liable for 50% of the $340 million settlement amount for these lawsuits, which are described below. The settlement also releases all claims by AT&T and AT&T Broadband in the At Home bankruptcy.
The Excite@Home Bondholders’ Liquidating Trust was established in the Excite@Home Bankruptcy to assert claims against the company’s former controlling shareholders, AT&T, Comcast and Cox. The Trust was scheduled to begin a one to two month long jury trial against AT&T on May 2, 2005 in Superior Court, San Jose, California. Among other claims, the lawsuit alleged that AT&T breached fiduciary duties it owed to Excite@Home and misappropriated Excite@Home’s trade secrets in connection with the building of an AT&T high speed network to replace Excite@Home’s network when Excite@Home filed for bankruptcy in September 2001.
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- In December 2001, AT&T abruptly terminated an agreement to acquire Excite@Home, which provided Internet services for cable modem users. Excite@Home then terminated its broadband Internet services to AT&T cable modem customers, knocking some 764,000 users offline. AT&T restored service using its own backbone. Comcast Communications and Cox Communications gradually migrated their cable modem users off of Excite@Home and onto their own backbones over a period of several weeks.
- On September 28, 2001, Excite@Home and its wholly owned subsidiaries filed for Chapter 11 bankruptcy protection. On the same date, AT&T agreed to purchase substantially all of the assets and services associated with Excite@Home’s broadband Internet access business for $307 million and the assumption of certain liabilities. At the time, Excite@Home was serving 4,162,000 worldwide residential broadband subscribers.