The confirmation of Charter Communications Inc. 's prearranged reorganization plan last Tuesday (Nov. 17) by a New York court means the MSO's exit from Chapter 11 bankruptcy should see nothing but clear sailing from here, right? (See Court Confirms Charter Reorg Plan.)

Wrong.

On Friday, JP.MorganChase and a batch of other lenders and stockholders, urged the judge handling the case to stay the order so they could have enough time to mount an appeal and lodge objections they have about the prearranged bankruptcy.

The tactic has already worked to a degree. On Monday, Judge James Peck granted the motion, ordering that any replies to the move for a stay be filed today by 8 a.m. Eastern Time. The judge also scheduled a hearing on the matter for today at 10 a.m. ET.

Results from the hearing aren't yet known, but the JP.Morgan group feared that, in the absence of today's hearing, its stay motion would be rendered moot because the reorganization plan is scheduled to automatically become effective 10 days after the issuance of the original order: Friday, Nov. 27 -- the day after the U.S. Thanksgiving holiday, which also happens to be a court holiday.

Judge Peck, who's handling the case for the U.S. Bankruptcy Court for the Southern District of New York, confirmed the reorganization plan last week, stamping a plan that will cut $8 billion from Charter's $21.7 billion debt load, and will reinstate about $11.4 billion of the MSO's senior bank debt. Charter's also looking to obtain more than $3 billion for refinancing and new capital. (See Charter Turns to Chapter 11.)

The plan, as approved, will hand over control to a handful of creditors, including Apollo Management AP, Crestview Partners, Oaktree Capital Group, and Franklin Resources. Charter chairman and Microsoft founder Paul Allen, meanwhile, is expected to maintain a 35 percent voting stake in the St. Louis-based MSO.

Charter filed for bankruptcy in March, and recent reports suggest that the St. Louis-based MSO could make its exit as late as Dec. 15. (See Charter's Chapter 11 Adds a Page.)

But the opposition, which includes JP.Morgan and Wells Fargo, has argued that the prearranged deal violates Charter's earlier loan agreements. The judge has countered that a debt reinstatement would save the MSO $3 billion, far outweighing the $375 million in restitution that's coming to Allen.

"The restructuring effectively wipes out Mr. Allen's eight billion dollar investment in Charter and strips him of any meaningful ongoing economic interest in the company," Peck noted in his 82-page opinion (PDF) filed last week. "In practical terms, Charter will cease to be a Paul Allen company assuming that the Plan is consummated."

Charter was not available for comment Monday, but the MSO reportedly expects the reorg to move forward even if an appeal is still pending, and plans to apply for listing of its new common stock 45 days after exiting Chapter 11.

— Jeff Baumgartner, Site Editor, Cable Digital News