RDA Holding Co. Inc., the parent of Reader’s Digest that has recently sold off assets including Allrecipes.com and Every Day with Rachel Ray, filed for Chapter 11 bankruptcy protection in New York on Saturday, Feb. 17.
The company emerged from its last bankruptcy case in early 2010, according to court documents. After the case, the company continued to be negatively affected by economic downturns and the shift from print to digital media, it said in court papers.
RDA owns Reader’s Digest, Taste of Home, The Family Handyman, Birds & Blooms, Country and other titles.
The company sought bankruptcy protection with a plan to convert about $465 million of debt to equity and reduce its debt burden by about 80 percent. RDA is hoping to confirm a reorganization plan within the next four months and exit from bankruptcy in six months.
Wells Fargo Bank NA and an committee holding more than two-third of the company’s senior secured notes will provide Reader’s Digest with $105 million in debtor-in-possession financing, which has to be approved by a bankruptcy court.
When the company filed its latest bankruptcy case, it had $534 million in debt, according to court papers. The company’s reorganization plan didn’t account for the steep declines in the media industry over the past few years, RDA said in court papers.
RDA joins an increasing group of publishing companies that are seeking bankruptcy protection. In September, the Journal Register Co., which owns a chain of newspapers, sought bankruptcy protection for a second time to sell its assets.
Other publishing companies that have sought bankruptcy protection include Houghton Mifflin Harcourt Publishing Co. (May 2012), Tribune Co. (December 2008) and Philadelphia Newspaper LLC (February 2009).
After the company’s previous bankruptcy case ended, RDA sold Allrecipes in early 2012 and Rachel Ray brand in 2011, for $180 million and $4.3 million, respectively. Both assets were sold to Meredith Corp. Meanwhile, Meredith continues its hunt for targets, reportedly in discussions with Time Warner Inc. to buy the majority of its magazine division, including popular titles such as Time, Fortune, Sports Illustrated and People.
For more on Meredith, see “Modernizing Meredith.”