• by Erik Sass  @eriksass1, March 7, 2008

After years of financial woes, Ziff Davis Media has filed for bankruptcy in New York, and has met with creditors to restructure its debt payments, the company announced Thursday. Long anticipated by some observers, the move is nevertheless a setback for the company, which had been moving to put its finances on a firm footing in recent years.

Operations will continue as usual through the restructuring process, according to an official statement released by the company. A majority of its creditors have agreed to set aside up to $24.5 million to fund the company during the bankruptcy period. There are some holdouts among creditors, but Ziff Davis Media CEO Jason Young said that court approval of the bankruptcy proceedings could be obtained without their consent.

The bankruptcy filing should result in the reduction of immediately owed debt from $225 million to $57.5 million, with 11.2% of the company's common stock to be distributed as partial compensation. Ziff hopes to leave Chapter 11 status as early as this summer.

Young remarked that "today's restructuring agreement goes a long way toward resolving the burdens of a debt load and capital structure established seven years ago, during a leveraged buyout of the Company." He added: "Operationally, we are also making great progress. As a result of our employees' hard work, we ended 2007 on a strong note. We matched audience growth with impressive digital revenue expansion. And while the print market continued to be challenging, we continue to be print category leaders in the markets we serve."

Speculation that Ziff might file for bankruptcy dates back to at least August 2007, when the company missed a key payment on its total $390 million debt. The company stoked this speculation with the hiring of bankruptcy specialists Alvarez & Marsal as legal representation.

Over the past seven years, the tech magazine company has been engaged in a tough transition to Web-based publishing and distribution. Although it still publishes a stable of well-known print magazines, many have been reconfigured as adjuncts to primary content distribution via the Internet.