Penthouse Magazine Goes Bust?; Parent Co. Files Chapter 11 Bankruptcy

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Boca Raton, Fla.-based FriendFinder Networks, Inc., the parent company of Penthouse magazine and operator of adult and dating Web sites, yesterday filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware (In re FriendFinder Networks, Inc., Case No. 13-12405).

The former Penthouse Media Group, which changed its name to FriendFinder and became a publicly traded company when it purchased Various, Inc. in 2007 from founders Andrew Conru and Lars Mapstead, hopes to pare $300 million in secured debt when it emerges from insolvency by January 31, 2014, as a private company if its restructuring plan plays out as intended, according to accounts by The Wall St. Journal and Associated Press.

The Journal reported the company owes $234.3 million to first-lien noteholders and another $320.3 million to non-cash pay second-lien noteholders. Under its proposed Chapter 11 reorganization, about which FriendFinder claims  80 percent of lienholders already are on-board, first-lien holders would swap notes for notes in the same amounts from the post-bankruptcy entity and receive additional cash or notes. Second-lien noteholders would receive "substantially all" the common stock of the post-bankruptcy company and possibly cash, according to the Journal article.

FriendFinder suffered losses of $49.4 million in its last fiscal year as Penthouse demonstrated that even skin magazines have bare-bones advertising revenues. In fact, the company's revenues plunged 10.1 percent compared to a year ago. According to the company's filing, FriendFinder boasts 750,000 subscribers to its more than 8,000 Web sites and employs roughly 435 staffers.

 Besides Penthouse and various adult Web sites, FriendFinder also operates dating sites, including a Christian singles site, Bigchurch, com, the name of which reflects the company's penchant for all things big.