Reader's Digest: Humor In Solvency

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To pare its debt by $465 million, the owner of the venerable Reader's Digest magazine has filed for Chapter  11 bankruptcy for the second time in the past five years, Bloomberg News reported.

In re RDA Holding Co., Inc. (Docket No. 13-22233), filed in the United States Bankruptcy Court for the Southern District of New York, revealed the company that publishes the 91-year old Reader's Digest ("RD") claims both assets and liabilities of more than $1 billion. A victim of declining ad revenues and shifting public taste toward electronic news media outlets, RD last filed for bankruptcy protection in 2009 (See "TUOL" post 8/17/09).

The magazine, which was founded by DeWitt and Lila Wallace, was acquired in 2007 by the Ripplewood Holdings LLC private equity firm for $1.6 billion, according to the Bloomberg News article.  Under a proposed restructuring backed by Wells Fargo & Co., senior notes totaling $465 million would be converted to equity, thereby reducing RDA Holding Co.'s debt by 80 percent and allowing it to emerge from insolvency with $100 million in debt.

RD's Web site boasts that its readership worldwide exceeds 25 million.