Posted tagged ‘Chapter 11’

Reader’s Digest Filing For Bankruptcy

August 17, 2009

Reader’s Digest Association Inc., the of Reader’s Digest magazine, said today that it would likely file for Chapter 11 bankruptcy.

From Reuters:

The media company, known worldwide for its family-friendly namesake magazine, been trying to slash costs and boost growth since it was taken private in 2007 by an investor group led by Ripplewood Holdings LLC.

The bankruptcy would take the form of a so-called pre-arranged filing, Reader’s Digest said in a statement. A pre-arranged filing comes after a company has already reached deals with its lenders to cut its debt.

The Chapter 11 filing will apply only to the company’s U.S. businesses. Its operations in Canada, Latin America, Europe, Africa, Asia and Australia-New Zealand will not be affected.

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GM to Sell Cars on eBay

August 10, 2009

It appears that more than 225 General Motors dealers in California will sell vehicles through the eBay online auction site in a four-week trial.

From CNN:

Under the program, which begins Tuesday, consumers will be able to bargain with the dealers for Chevrolet, Buick, GMC and Pontiac cars and trucks from model years 2008, 2009 and 2010. The program ends Sept. 8.

The new car shopping website, gm.ebay.com, will feature a “wide selection” of up to 20,000 new GM vehicles at “competitive prices,” the companies said in a press release.

Customers will be able to buy cars outright at the advertised price using the Web site’s “Buy It Now” option. Alternatively, customers can suggest a price under the “Best Offer” option, which may then be negotiated with the dealer.

“Together with eBay Motors, GM and our dealers are reinventing the car-buying experience for our California customers,” said Mark LaNeve, GM vice president of U.S. sales, in a statement.

GM emerged from bankruptcy protection on July 10, concluding a 40-day stay in Chapter 11 with the sale of its key operations to a new company majority-owned by the U.S. Treasury. The company pledged to win back American consumers and taxpayers.

The automaker has sold certain new and certified-used GM models on eBay Motors in the past. But the scale of the new program marks a significant shift for the online auction house, which is traditionally focused on used cars and auto parts.

Chicago Sun-Times Files For Chapter 11

March 31, 2009

The Sun-Times Media Group, which publishes the Chicago Sun-Times newspaper, said this morning that it had filed for bankruptcy protection.

From Dow Jones:

Sun-Times Media Group Inc. (SUTM) has filed for bankruptcy protection, the latest casualty of an extended advertising slump that is reshaping the newspaper industry.

It joins other media companies such as Tribune Co. (TRBCQ), the Chicago-based publisher of the Los Angeles Times and Chicago Tribune, which filed under Chapter 11 late last year after it was unable to cover interest on bank debt it picked up as part of Sam Zell’s takeover of the company.

The newspaper industry has seen bankruptcy filings, asset sales, layoffs and other cost-cutting moves this year as the economic downturn worsened already-declining ad sales. The ad slump has deepened since late last year, spreading to television broadcasters and Internet media sites.

Sun-Times Media operates 59 newspapers and related Web sites, including the Chicago Sun-Times.

Seattle Post-Intelligencer Goes Web Only

March 16, 2009

It was announced today that the Seattle Post-Intelligencer will print its final edition Tuesday.

From the Associated Press:

Hearst Corp., which owns the 146-year-old P-I, said Monday that it failed to find a buyer for the newspaper, which it put up for a 60-day sale in January after years of losing money. Now the P-I will shift entirely to the Web.

“Tonight will be the final run, so let’s do it right,” publisher Roger Oglesby told the newsroom.

Hearst’s decision to abandon the print product in favor of an Internet-only version is the first for a large American newspaper, raising questions about whether the company can make money in a medium where others have come up short.

David Lonay, 80, a subscriber since 1950, said he’ll miss a morning ritual that can’t be replaced by a Web-only version.

“The first thing I do every day is get the P-I and read it,” Lonay said. “I really feel like an old friend is dying.”

Hearst’s move to end the print edition leaves the P-I’s larger rival, The Seattle Times, as the only mainstream daily in the city.

“It’s a really sad day for Seattle,” said P-I reporter Angela Galloway. “The P-I has its strengths and weaknesses but it always strove for a noble cause, which was to give voice to those without power and scrutiny of those with power.”

Seattle follows Denver in losing a daily newspaper this year. The Rocky Mountain News closed after its owner, E.W. Scripps Co., couldn’t find a buyer. In Arizona, Gannett Co.’s Tucson Citizen is set to close Saturday, leaving one newspaper in that city.

And last month Hearst said it would close or sell the San Francisco Chronicle if the newspaper couldn’t slash expenses in coming weeks.

The newspaper industry has seen ad revenue fall in recent years as advertisers migrate to the Internet, particularly to sites offering free or low-cost alternatives for classified ads. Starting last summer, the recession intensified the decline in advertising revenue in all categories.

Four newspaper companies, including the owners of the Los Angeles Times, Chicago Tribune and The Philadelphia Inquirer, have sought Chapter 11 bankruptcy protection in recent months.

Sirius Prepares For Bankruptcy

February 10, 2009

Sirius XM Radio Inc. has hired advisers to prepare for a possible bankruptcy filing, which could come in days, according to a news report.

From the Associated Press:

The New York Times said late Tuesday documents and analysis of a potential Chapter 11 filing are nearly complete, say people close to the company.

Sirius, whose radio personalities include shock jock Howard Stern, has struggled to refinance its debt load at a time when banks are skittish about lending. About $1 billion worth of debt comes due in 2009.

A bankruptcy could complicate matters for Charlie Ergen, chief executive of Dish Network Corp., who recently bought a major portion of a $300 million batch in Sirius debt that matures next Tuesday, the paper said.

Since then, speculation has arisen about whether Ergen would make a bid to buy Sirius. The possibility of a bankruptcy filing could force his hand to make an offer now in order to avoid the auction process in court. It also could put pressure on him to convert his debt into equity in the company at a higher price than he initially considered, the paper said.

Sirius has hired Alvarez & Marsal; Simpson, Thatcher & Bartlett; and Evercore Partners.

Sirius declined to comment on the report, as did Alvarez & Marsal and Evercore Partners. Simpson, Thatcher & Bartlett didn’t immediately return a call for comment.

Nortel Files for Chapter 11 Bankruptcy

January 14, 2009

Nortel Networks filed for bankruptcy protection in Canada and the U.S. on Wednesday, the first major technology company to file for protection during the global downturn.

From the Associated Press:

North America’s biggest maker of telecommunications equipment has been dealing with a sharp drop in orders from phone company clients. It filed for court protection in Delaware on Wednesday, a day before the firm is due to repay a $107 million interest debt on bonds.

Creditor protection would give the company more opportunities to explore restructuring options or sell off some of its assets.

The Toronto-based company said in a release that it had been in the process of a turnaround since late 2005 but added that “the global financial crisis and recession have compounded Nortel’s financial challenges and directly impacted its ability to complete this transformation.”

The company said it is taking this action now with a $2.4 billion Canadian ($2 billion) cash position.

“Nortel must be put on a sound financial footing once and for all,” Nortel President and Chief Executive Mike Zafirovski said in the statement.

The company has been attempting to recover for years from an accounting crisis that affected results and caused shareholder lawsuits, regulatory investigations and the firing of key executives, including CEO Frank Dunn.

President Bush Announces Auto Industry Bailout

December 19, 2008

President Bush announced a rescue plan for General Motors and Chrysler this morning that will make $13.4 billion in federal loans available to the industry almost immediately.

From CNNMoney:

A senior administration official briefing reporters said he expects that GM and Chrysler LLC will be signing the loan papers to access the cash later Friday morning.

The money will come from the $700 billion fund set aside to bailout Wall Street firms and banks in October.

With these loans, Treasury will have committed virtually all of the $350 billion of that fund that it can hand out without additional authorization from Congress. Once Congress releases the other $350 billion, the two automakers will be able to borrow an additional $4 billion.

GM will get $9.4 billion from the first allocation of federal loan money, while Chrysler would get the other $4 billion.

The loans are for three years but the money will have to be repaid in full within 30 days if the firms do not show themselves to be viable by March 31. It is expected that the companies will have to negotiate new agreements with unions and creditors in order to do so.

Here is the text of President Bush’s remarks delivered this morning at the White House, courtesy of the Associated Press, on financial assistance to troubled auto makers:

BUSH: Good morning.

For years, America’s automakers have faced serious challenges; burdensome costs, shrinking share of the market and declining profits. In recent months, the global financial crisis has made these challenges even more severe.

Now, some U.S. auto executives say that their companies are nearing collapse and that the only way they can buy time to restructure is with help from the federal government. It’s a difficult situation that involves fundamental questions about the proper role of government.

On the one hand, government has the responsibility not to undermine the private enterprise system. On the other hand, government has a responsibility to safeguard the broader health and stability of our economy.

Addressing the challenges in the auto industry requires us to balance these two responsibilities. If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers.

Under ordinary economic circumstances, I would say this is the price that failed companies must pay. And I would not favor intervening to prevent the automakers from going out of business. But these are not ordinary circumstances.

In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action. The question is how we can best give it a chance to succeed.

Some argue the wisest path is to allow the auto companies to reorganize through Chapter 11 provisions of our bankruptcy laws and provide federal loans to keep them operating while they try to restructure under the supervision of a bankruptcy court.

But given the current state of the auto industry and the economy, Chapter 11 is unlikely to work for American automakers at this time. American consumers understand why. If you hear that a car company is suddenly going into bankruptcy, you worry that parts and servicing will not be available and you question the value of your warranty.

With consumers hesitant to buy new cars from struggling automakers, it would be more difficult for auto companies to recover. Additionally, the financial crisis brought the auto companies to the brink of bankruptcy much faster than they could have anticipated. And they have not made the legal and financial preparations necessary to carry out an orderly bankruptcy proceeding that could lead to a successful restructuring.

The convergence of these factors means there is too great a risk that bankruptcy now would lead to a disorderly liquidation of American auto companies. My economic advisers believe that such a collapse would deal an unacceptably painful blow to hardworking Americans far beyond the auto industry. It would worsen a weak job market and exacerbate the financial crisis. It could send our suffering economy into a deeper and longer recession.

And it would leave the next president to confront the demise of a major American industry in his first days of office.

The more responsible option is to give the auto companies an incentive to restructure outside of bankruptcy and a brief window in which to do it. And that is why my administration worked with Congress on a bill to provide automakers with loans to stave off bankruptcy while they develop plans for viability.

This legislation earned bipartisan support from majorities in both houses of Congress. Unfortunately, despite extensive debate and agreement that we should prevent disorderly bankruptcies in the American auto industry, Congress was unable to get a bill to my desk before adjourning this year.

This means the only way to avoid a collapse of the U.S. auto industry is for the executive branch to step in. The American people want the auto companies to succeed and so do I.

So today I’m announcing that the federal government will grant loans to all the companies under conditions similar to those Congress considered last week. These loans will provide help in two ways. First, they will give automakers three months to put in place plans to restructure into viable companies which we believe they are capable of doing.

Second, if restructuring cannot be accomplished outside of bankruptcy, the loans will provide time for companies to make the legal and financial preparations necessary for an orderly Chapter 11 process that offers a better prospect of long-term success and gives consumer confidence that they can continue to buy American cars.

Because Congress failed to make funds available for these loans, the plan I’m announcing today will be drawn from the financial rescue package Congress approved earlier this fall. The terms of the loans will require auto companies to demonstrate how they would become viable.

They must pay back all their loans to the government and show that their firms can earn a profit and achieve a positive net worth. This restructuring will require meaningful concessions from all involved in the auto industry — management, labor unions, creditors, bond holders, dealers, and suppliers.

In particular, automakers must meet conditions that experts agree are necessary for long-term viability, including putting their retirement plans on a sustainable footing, persuading bond holders to convert their debt into capital that companies need to address immediate financial shortfalls, and making their compensation competitive with foreign automakers who have major operations in the United States.

If a company fails to come up with a viable plan by March 31st, it would be required to repay its federal loans. The automakers and unions must understand what is at stake and make hard decisions necessary to reform.

These conditions send a clear message to everyone involved in the future of American automakers. The time to make hard decisions to become viable is now. Or the only option will be bankruptcy.

The actions I’m announcing today represent a step that we wish were not necessary. But given the situation, it is the most effective and responsible way to address this challenge facing our nation. By giving the auto companies a chance to restructure, we will shield the American people from a harsh economic blow at a vulnerable time and we will give American workers an opportunity to show the world, once again, they can meet challenges with ingenuity and determination and bounce back from tough times and emerge stronger than before.

Thank you.