• by Erik Sass  @eriksass1, July 2, 2013

RDA Holding Co., which owns The Reader’s Digest Association, has received approval for its bankruptcy reorganization plan from the U.S. Bankruptcy Court for the Southern District of New York. It should exit Chapter 11 bankruptcy protection by the end of the month.
 
The reorganization plan, first proposed by RDA in a bankruptcy filing in February, will reduce RDA’s debt from around $500 million to $100 million, while converting $465 million in debt into equity, essentially giving creditors ownership of the company in return for waiving debt repayment.

Previously, the company said it was also securing $105 million in new “debtor-in-possession” financing from secured note-holders, which should allow the company to pay off the remainder of its bank debt.

According to RDA, the bankruptcy reorganization will allow the company plans to focus on its core businesses; it has already sold off a number of peripheral businesses, including Every Day With Rachael Ray and Allrecipes.com. At the time, RDA said it was selling Every Day With Rachael Ray because its ability to expand the brand was limited by its agreement with Rachael Ray herself.
 
This is the second bankruptcy reorganization for RDA in recent years.

RDA previously entered Chapter 11 bankruptcy protection in August 2009, seeking to reduce its debt from about $2.2 billion to about $550 million through negotiations with creditors. Much of that debt had been assumed as part of a $2.8 billion deal to take the company private engineered by Ripplewood Holdings, LLC. New owners took control of the company following its exit from bankruptcy in 2011.

advertisement

advertisement