High-Profile Bankruptcies / News

Reader’s Digest Seeks Bankruptcy Protection Again

After just reemerging from bankruptcy in 2010, Reader’s Digest once again files for Chapter 11 protection.  The parent company of the publication, RDA Holding, is using the filing to restructure the company while dealing with outstanding debt obligations topping over $1 billion.  As one of the oldest publications to have graced coffee tables across America for over 90 years, the magazine is struggling to maintain readership due to economic changes and digital innovations.

Reader’s Digest is known for being one of the first publications to report on the dangers of cigarette smoking during the early 1950′s.  The magazine went public in 1990 after being founded by Lila and Dewitt Wallace.  RDA Holding publishes more than 70 magazines with close to 50 editions of Reader’s Digest.

Documents related to the filing claim Reader’s Digest have roughly $1.2 billion in liabilities with just over $1 billion in assets.  Robert E. Guth, chief executive officer of the company, claims the filing is a necessary course of action that will help the company efficiently handle its financial issues so the company can continue to focus on their brands and products.  The magazine industry itself has been struggling to maintain print subscribers with more readers recommending digital access.

The first bankruptcy filing was in August of 2009 due to decreasing advertising from a previous acquisition.  The previous filing also helped reduce debt, but after reemerging in 2010, the company still had a heavy debt load while dealing with decreasing international sales.  Today, the company has over 20 brands in more than 70 countries. In the United States, it continues to be one of the most popular publications with more than 5 million subscribers.

Reference: http://dealbook.nytimes.com/2013/02/18/readers-digest-files-for-bankruptcy-again/

http://www.thewrap.com/media/column-post/readers-digest-files-second-bankruptcy-78086