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Court documents bankrupt the Reading Eagle Company



Falling ad revenue, rising production costs hampered the company's ability to cover debt, set records.

Reading, PA

This is a story of dive revenue and increasing debt, decreasing advertising and shrinking circulation.

Documents filed with the US Bankruptcy Court on Wednesday and filed today with the Tribunal tell the story of how the Reading Eagle Company found their financial situation untenable, and finally filed for bankruptcy protection under Chapter 11.

The Company includes the Reading Eagle, WEEU 830 AM, the weekly South Schuylkill News, Pretzel City Productions and its commercial printer REP. The company has 236 full-time employees and 20 part-time employees.

Revenues Decline, Debt Rises

The problems began in 2009, when the company took on "sizeable debt" to complete a 77,000-square-foot expansion of the company's 345 Penn St. headquarters. The space was created to house a new press and a consolidated distribution center.

But a pattern of falling advertising revenues made repayment of debt difficult.

Between 201

6 and 2018, according to the documents, the company's advertising revenue decreased $ 17 million to $ 12.6 million.

The rapid loss of advertising revenue in turn led to a deterioration in earnings before interest, taxes, depreciation and amortization (EBITDA), a common measure of a company's performance.

That EBITDA The number dropped from minus $ 916,000 on revenue of $ 35.2 million in 2016 to minus $ 4 million on revenue of $ 28 million in 2018.

The company's financial problems led to a defaults on the Sovereign Bank loan in 2009. At the time of the failure, the company owed the bank around $ 25 million.

In 2016, which was foreclosed by Santander Bank, formerly Sovereign Bank, for the loan, the President and Chief Executive Officer of the Reading Eagle Company, Peter D. Barbey, bought the company's debts to the bank. The purchase was made through BWH Media LLC, a subsidiary of Barny's Black Walnut Holdings LLC.

Following the purchase of debt by BWH Media, Reading Eagle Company continued to experience a significant cash flow loss. As a result, BWH Media granted additional loans to the company, averaging $ 250,000 per month. These loans were added to the debt acquired by Santander Bank.

The company took steps to stabilize the business, including layoffs. These steps were offset by rising costs for things like newsprint. At the same time, revenues continued to fall.

According to the court documents, costs can only be further reduced by further cuts to the newsroom, which can not stand "millions of dollars in cuts".

Debtors and Mr Barbey have now realized that, despite their best efforts, debtors are no longer a viable sole proprietorship under the current structure, "reads one of the documents.

Court documents The Company's Assets is quoted at just over $ 15 million and liabilities at just under $ 38.5 million.

Looking for a Buyer [194559007] Since 1945, corporate officials are looking for a potential merger or In December, the company hired Dirks, Van Essen, Murray and April to become interested in investing in or buying the company.

The company contacted 23 potential investors or buyers and provided information about the company that put it together 13 that were not listed in the court papers.

For the 14th In March an offer period was set.

By this deadline, only a letter of intent was received and company representatives decided that it should not be accepted. Instead, the company decided to apply for bankruptcy protection under Chapter 11 and to sell the company's assets through this process.

This led to Wednesday when the company petitioned the federal court and officially filed for bankruptcy protection.

Employees Gathered In a meeting room on the third floor on Wednesday afternoon, just before the documents were submitted, Barbey heard a brief announcement about the decision.

What is Chapter 11 bankruptcy?

In general, bankruptcy means the amount of your own debt is more than the assets and income can support, and there is no immediate prospect to pay off these debts in a timely manner.

Bankruptcy proceedings under Chapter 11, that is, it is made under Chapter 11 of the US Bankruptcy Code – is often referred to as "reorganization" and is used by a company to restructure its debt under the protection of the Bankruptcy Court.

It is filed when a company is unable to pay its debts to pay its debt or its creditors. In most cases, the company, which is called a debtor in the bankruptcy petitions, retains control of its business as a debtor and is subject to the supervision and jurisdiction of the court.

If the recovery is successful, the debtor may emerge from Chapter 11 bankruptcy within a few months, or within several years, depending on the size and complexity of the bankruptcy.

In a bankruptcy of Chapter 7, the company ceases its operations and sells its entire fortune then distributes the proceeds to its creditors. Any balance will be returned to the owners of the company.

Bankruptcy of Reading_Eagle on Scribd

Bankruptcy – Creditors of Reading_Eagle on Scribd


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