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Reorganization Plan of Reader's Digest Approved; Debt Reduced by $400 Million

Wednesday, July 3, 2013
The modified second amended joint plan of reorganization of RDA Holding Company, The Reader's Digest Association Inc., and certain other affiliated debtors was confirmed on June 28 by the U.S. Bankruptcy Court for the Southern District of New York (In re RDA Holding Company, Bankr. S.D.N.Y., No. 13-22233 (RDD), plan confirmed 6/28/13).


'Narrowly Defined Mission.'
According to a June 28 press release, the debtor anticipates emerging from bankruptcy protection at the end of July. When it does, it “will have reduced its debt by over 80% from approximately $500 million to approximately $100 million and have a stronger cash position. The [c]ompany will have converted approximately $465 million of secured notes to equity. In addition, it will focus solely on its most profitable core businesses, having shed non-core and less profitable ones--an effort that began in earnest several quarters ago. The [c]ompany has also made great progress in realigning its corporate infrastructure with its more narrowly defined mission.” Court documents show that the reorganization plan is premised upon a restructuring support agreement and the settlement of certain claims and causes of action between the debtors and certain creditors.

In the aforementioned press release, the debtor's CEO, Robert E. Guth, said, “We are taking decisive actions that are placing our business on a stronger path for the long-term and making us a more relevant and more profitable [c]ompany. We have used the restructuring period to reset and refresh our [c]ompany and have reconsidered nearly every aspect of our business. We look forward to laying out our go-forward strategy in the weeks ahead.”

The debtors filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of New York on Feb. 17, 2013 (25 BBLR 285, 2/28/13). They had emerged from a prior bankruptcy in 2010 (22 BBLR 258, 2/25/10).


The order confirming the plan is available at: http://www.bloomberglaw.com/public/document/RDA_Holding_Co_et_al_and_Direct_Entertainment_Media_Group_Inc_Doc

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