GateHouse Media to file Chapter 11, then form new company

GateHouse Media Inc. has filed Chapter 11 and has plans to restructure its $1.2 billion debt. The company owns hundreds of local websites and more than 400 community newspapers. Newcastle Investment Corp. owns 52 percent of the company’s debt and plans to combine GateHouse’s media group with 33 other publications it purchased from News Corp. for $87 million. It plans to form New Media, a publicly traded company created from all the operations Newcastle spun off. According to Newcastle, the newly formed company would benefit from cost cuts and digital revenue, and in over three years, it would be able to invest $1 billion to purchase more shopping publications and newspapers at a discount. The Chapter 11 bankruptcy came about after the 2008 financial crisis, when GateHouse became over leveraged. However, the past few years has revealed doubled digital revenue and a $150 million cut in costs. Although total revenue fell five percent for fiscal year 2012, digital revenue increased to almost 27 percent for the entire year. Creditors are supporting the reorganization, and they have the option of cashing their stock at 40 cents on the dollar or converting their positions to stock in GateHouse. New Media is expected… Continue reading

Lehman Brothers bankruptcy still lingering

After failing to secure a government bailout or locate a buyer, Lehman Brothers Holdings Inc. filed for Chapter 11bankruptcy on Sept. 15, 2008. The $2 billion price tag for winding down the massive holdings of the New York-based investment banking firm has eclipsed the $757 million in bankruptcy costs incurred by the previous record holder Enron. While some critics feel that the fees being charged in the Lehman bankruptcy case are unusually high, a professor at the University of Illinois’ College of Law pointed out that the typical percentage paid in fees for Chapter 11 bankruptcy cases is approximately two to four percent of the assets of the company filing for bankruptcy. In the case of Lehman Brothers, the $2 billion in fees is far less than that percentage when compared to the company’s $639 billion in assets. A bankruptcy attorney also noted that highly chaotic bankruptcies are typically more expensive than less complex cases. According to the 2011 court approved liquidation plan, creditors hoping to recover some of the money that they lost as a result of their dealings with Lehman Brothers are currently scheduled to receive a payment equaling approximately 18 cents for every dollar that they are… Continue reading

Cloud storage enterprise files for bankruptcy

Like most New York businesses, operating a cloud storage enterprise is expensive. That reality, as well as frequent changes in leadership, contributed to Nirvanix’s recentChapter 11 bankruptcy filing. Initially, the company set a Sept. 30 deadline to remove all data stored in the cloud. However, they have since extended the deadline to Oct. 15. In addition, Nirvanix provided higher speeds of connectivity to help consumers retrieve their data. Nirvanix’s bankruptcy filing allowed the company to continue providing services so that the monumental data transfer could run more smoothly. The move came as a surprise since only a year ago, the technical company was well-funded as well as on the cutting-edge of new cloud technologies. The company’s website was changed to encourage customers to seek cloud storage from four alternate providers. Chapter 11 bankruptcy allows a business to seek court protection from its creditors while its financial affairs are reorganized. While Chapter 11 is most frequently used by small businesses that wish to stay in business while reorganizing debt, the general population is most familiar with Chapter 11 because of large corportations, such as General Motors, that have used it to reorganize. Reorganizing under Chapter 11 often includes modifying the terms… Continue reading

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