According to an article in Forbes, the Reader’s Digest announced that it will file for Chapter 11 bankruptcy in an effort to save its struggling publication.  Using Chapter 11 bankruptcy, Reader’s Digest will move to swap $1.7 billion of its debt for ownership of the company.

The article said:

“Chief Mary Berner said the company chose not to pay a $27 million interest payment due on 9% senior subordinated notes. The financial restructuring will reduce the company’s debt load 75% from $2.2 billion to $550 million; in return, lenders will get ownership.”

A possible Reader’s Digest bankruptcy had been rumored for months before the company’s announcement this week.  In January, the company had already implemented 300 job losses, 8 percent of its workforce and as recently as June the company reduced its circulation from 8 million to 5.5 million. Reader’s Digest is just one of the most recent print publications to seek bankruptcy relief because of sagging advertising sales and shrinking readership. And some analysts doubt the publication, which was launched in 1922, will be able to survive the bankruptcy and become a profitable business due to stiff competition from free online content.