Printers hit as Reader's Digest files for Chapter 11 again

20 February 2013

Business

Three of the largest unsecured creditors of Reader's Digest parent RDA Holding's last insolvency filing found themselves in painfully familiar territory this week as the publisher once again filed for Chapter 11.

The move comes less than four years after the last time RDA filed for Chapter 11 protection, in August of 2009, and leading commercial printers Williams Lea, RR Donnelley and Quad/Graphics are again among the top unsecured creditors.

Reader’s Digest, which was founded 91 years ago by DeWitt and Lila Wallace and went public in 1990, listed assets and debt of more than $1 billion each in a bankruptcy filing earlier this week in U.S. Bankruptcy Court in suburban White Plains, N.Y.

RDA said the Chapter 11 filing was part of a restructuring agreement with key creditors that will see about $465m of remaining senior notes converted to equity, leaving the company with $100m in debt when it exits bankruptcy protection.

"The Chapter 11 process, which will facilitate a significant debt reduction, will enable us to continue to redefine our business by focusing our resources on our strong North America publishing brands, which have shown a new vitality as a result of our transformation efforts, particularly in the digital arena," said President/CEO Robert Guth in a statement.

RDA said the Chapter 11 filing is not expected to impact its day-to-day operations, adding it will continue to market and publish all of its U.S. publications during this process, as well as its international publications.

"The Company’s qualified pension plan remains overfunded and will continue to be used to support its retirees," RDA continued in a statement. "Suppliers and vendors will be paid for goods and services provided to the Company after the February 17, 2013 filing."

The New York city offices of Williams Lea was listed as the largest trade creditor, with a claim of $6m - an improvement on the $8.9m it was owed when RDA failed in 2009; Sussex, WI-based Quad/Graphics was the third largest trade creditor at $3.6m (2009 claim: $3m); while RR Donnelley Receivables came in fourth in terms of trade claims with $1.6m (2009: $2.4m). None of the three companies responded to interview requests from PrintWeek.

Reader’s Digest is read by more than 25m people — all told RDA publishes 75 magazines globally including 49 editions of Reader’s Digest, the Family Handyman and Birds & Blooms.
RDA’s international operations, including Canada, are not part of the filing, the company stressed.