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Owners of Reader’s Digest File again for Bankruptcy
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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.

  
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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.

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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.



 

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