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Owners of Reader’s Digest File again for Bankruptcy
On Sunday, RDA Holding Co, the owner of the once hugely popular Reader’s Digest magazine filed for bankruptcy for a second time within four years. The move raised consternation in media circles about the future of print media, with many magazines ceasing their hard-print existence in recent times.
In their Chapter 11 bankruptcy filing, the company cited unexpectedly steep decline of the print media industry, as a reason for it going bankrupt. However, the bankruptcy is only related to its U.S. operations.
RDA Holding Co, along with more than two dozen affiliates filed for a pre-negotiated bankruptcy plan that, according to the company, would help to reduce its debt of $534 million by almost 80 percent. The plan was filed at the U.S. Bankruptcy court in the Southern District of New York.
Referring to its earlier bankruptcy in 2009, Robert Guth, the company’s president and chief executive officer, observed in court documents that despite managing to survive as a smaller company in 2010, the company’s “business plan and financial forecasts did not adequately account for the steep declines that the media industry has suffered over the last few years – as evidenced by Houghton Mifflin Harcourt Publishing Company’s recent return to Chapter 11.”
Dropping a hint that all was not well, also on the international front, Guth further observed that the company’s business plan did not “adequately reflect the fragility of RDA’s wide-reaching international footprint.”
Under the submitted restructuring plan the company plans to exit from bankruptcy within four months. It has submitted that $464.4 million of its senior notes will convert to equity and the company would be left with only a $100 million debt. Wells Fargo & Co and others have agreed to a debtor-in-possession financing of $105 million to permit the company to continue operation.
The Reader’s Digest magazine, once ubiquitous throughout the world of English readers, was founded in 1922 by DeWitt Wallace and his wife Lila Acheson Wallace. It was once the best-selling consumer magazine in the United States. According to court documents, it has a current global asset base of more than $1.1 billion.