updated - May 19, 2013 Sunday EDT
It is the second bankruptcy filing for Reader's Digest, as RDA Holding filed for Chapter 11 this weekend to stave off debts. The iconic magazine's parent company hopes to exchange equity for $465 million it owes to creditors.
Reader's Digest has almost $1.2 billion in total debt, while holding $1.1 billion in assets.
A $105 million loan will keep the magazine solvent during bankruptcy proceedings.
As the publisher nears the century mark, it struggles with changes brought on by modern habits and technology. A plethora of news publications entering the market have squeezed margins even as the industry grows.
CEO Robert E. Gruth said that they are in a process of "transforming the business" and that the latest filing gives RDA room to complete changes already in motion.
Previously, Reader's Digest emerged from bankruptcy in 2009 with JPMorgan Chase and other creditors in charge. Selling off properties such as Allrecipes.com and other "nonessential" publications allowed the publisher to focus on its core business and readership.
Although the company has paid off some debt through these sales, it continues to face an uphill battle in the publishing industry, and requires a restructuring of its debt in order to remain viable going forward.
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