Source: McClatchy Co.
While many were celebrating Valentine’s Day, McClatchy was not enjoying hearts and flowers. Instead, McClatchy Co. was trying desperately to save itself and 53 wholly owned subsidiaries by filing a voluntary Chapter 11 petition for bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York. Filing a Chapter 11 bankruptcy petition provides the company with immediate protection while it tries to reach an agreement with secured lenders, bondholders and the Pension Benefit Guaranty Corporation (PBGC).
During the restructuring, the Sacramento-based McClatchy and 30 newsrooms across the country will continue to operate as usual, according to a February 13, 2020 news release. This includes paying employee wages and benefits. In addition to its own resources, McClatchy has gotten $50 million in financing from Encina Business Credit to help the company maintain its daily operations.
“McClatchy’s plan provides a resolution to legacy debt and pension obligations while maximizing outcomes for customers and other stakeholders,” said Craig Forman, McClatchy president and CEO. “When local media suffers in the face of industry challenges, communities suffer: polarization grows, civic connections fray and borrowing costs rise for local governments. We are moving with speed and focus to benefit all our stakeholders and our communities.”
McClatchy created a new website, McClatchyTransformation.com, with a letter to shareholders and a video to explain their decision to file Chapter 11. In the video, they point out that other well-known companies – Delta, iHeart Media and GateHouse – have all gone through Chapter 11 and emerged on the other side, financially stronger and poised for the future.