A recent article in the Sunday edition of the New York Times on December 20, 2009, about the transformation of the Reader’s Digest is a great example of how a company can benefit from Chapter 11. This example shows how the process of denial, accepting and then embracing the process can help a business, regardless of its size and industry.
Now, two years after a private equity deal saddled Reader’s Digest with $2.2 billion in debt, and three months after it filed for bankruptcy, it is ready to emerge a reorganized and transformed company. Reader’s Digest was badly in need of help before it arrived. It was publicly traded at the time, and had almost $1 billion in debt, most of it from acquisitions. “Bye-bye, Reader’s Digest. Hello ‘multibrand media and marketing company that educates, entertains and connects audiences around the world.’”