Even some of the largest businesses in Texas can face serious financial problems and difficulties meeting their obligations. McClatchy, the well-known publisher of newspapers like the Fort Worth Star-Telegram, Kansas City Star and Miami Herald, filed for Chapter 11 bankruptcy as it struggles with pension obligations and other debts amid a dramatically changing newspaper industry. For businesses dealing with overwhelming debt, Chapter 11 bankruptcy can provide a path to reorganization. Some of the country’s best-known companies have dealt with Chapter 11 reorganization at some point, including General Motors and Texaco. Understanding business bankruptcy may help you to make a decision about how to handle overwhelming debt at your own company.
Plans to stay in business
McClatchy said that it plans to stay in business throughout the bankruptcy reorganization process, regularly publishing 30 newspapers. The company said that it had obtained $50 million in credit financing for its restructuring process. The publisher’s largest shareholder is a hedge fund, and it said that it planned to reorganize as a private company with that fund as the majority owner, bringing an end to 163 years of family control of the business. One of the largest obligations McClatchy is dealing with is pension plans for retired employees. The company announced that it is in negotiations with a federal insurance plan for private pensions to take over the retirement payouts for those workers.
Response to changing newspaper industry
The newspaper industry and print journalism have gone through tough times as a whole in recent years, especially as more people flock to free, unpaid online content. Advertising revenues for online publications are far lower than those that print publications could garner in the past, especially as most ad sales take place through clearinghouses like Google and Facebook, who reap the majority of the profits.
Even if your own industry is still on the rise, business debt can seriously affect your ability to pursue your main goals. Small and medium-sized businesses may find that Chapter 11 bankruptcy may provide them with an opportunity to reorganize themselves and restructure their obligations in order to move forward.
