Several major news sources reported today that Source Interlink has filed for a pre-packaged, lender-approved Chapter 11 bankruptcy. According to a story on the New York Post:
“The pre-packaged Chapter 11 is expected to write off about $900 million in debt owed to a consortium of banks led by Citi.
Most of the debt was tied to Source’s $1.2 billion acquisition of Primedia’s enthusiast media division in May 2007, when Source shares were at $5.89″
According to Source Interlink’s Website, the company decided to use a “pre-pack reorganization” because it is the “quickest and easiest form of restructuring through the bankruptcy courts. Using this method, we expect to complete our restructuring in about 30 days.”
While the site says that Source Interlink will continue business as usual, it also states that: “Regretfully, all of the Company’s common stock will be canceled.”
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