Cygnus Files for Chapter 11
One lender holdout forces courts to approve restructuring plan.
Cygnus Business Media today announced to employees that it is entering a restructuring under Chapter 11 of the U.S. Bankruptcy Code that will result in a secured debt-equity exchange to reduce the company's debt.
The publisher had reached an agreement with 23 of its 24 lenders on a pre-packaged restructuring but an out-of-court settlement required a unanimous decision. With the lone holdout, Cygnus is forced to implement the same plan under Chapter 11. Filings were made with the U.S. Bankruptcy Court for the District of Delaware in Wilmington.
Cygnus says it expects to emerge from Chapter 11 within 45 days and the company claims this won't have any effect on day-to-day operations. "All vendors and creditors will be paid 100 cents on the dollar," said spokesperson Kathy Scott. "We plan to be out in 45 days. All employees are getting paid and benefits remain in place. In 45 days we will emerge with a better debt structure."
Under the plan, Cygnus' secured debt will be reduced from $180 million to $60 million.
Court filings can be found here.