One of America’s most iconic names READERS DIGEST in print media is set to file for bankruptcy. According to The Wall Street Journal, Reader’s Digest has “reached an agreement with its lenders on a restructuring plan that it will likely complete under a prepackaged bankruptcy filing in order to reduce its debt.”
The Bank repossession Website says “It appears that nothing is safe from the economy these days. The latest story from is related to the Reader’s Digest Bankruptcy. It appears that a Reader’s Digest Chapter 11 bankruptcy filing is in the works to reduce the magazine’s debt by up to 75 percent, according to reports. It appears that the stay in bankruptcy is going to be relatively short, as it appears that the details of the Reader’s Digest Bankruptcy have already been worked out with lenders”.
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That said, for now, it appears that Reader’s Digest will survive, as the company says in a statement that it will “continue to operate normally throughout the restructuring process.” With an incredibly well-known brand, it’s unlikely the publication will disappear completely anytime soon, though, like other troubled print media, it may have to take on a much different, more digitally focused approach to survive in the long run.
According to Reuters, story here:
The bankruptcy would take the form of a prearranged filing, which comes after a company has already reached deals with lenders to reduce debt. The deal, if approved by a bankruptcy court, would allow Reader’s Digest to slash its debt load to $550 million, from the current $2.2 billion.
The arrangement would also allow the company to reduce its annual interest payments on remaining debt to less than $80 million from about $145 million, said President and Chief Executive Officer Mary Berner in an interview.
In short the Reader’s Digest bankruptcy isn’t going to have much of an affect on the magazine in the near term, but that doesn’t mean that changes aren’t in store. The Reader’s Digest Chapter 11 filing allows the company some flexibility in dealing with creditors and allows them to restructure their debt in an attempt to keep the company viable. I am guessing that they will have to make some changes to their business model if they are going to survive. My question for all of you is whether you think the magazine will survive, and if it doesn’t do you really care?