Report: Scout Media files for bankruptcy after creditors petition for payment

[jbcarol]

Scout Media announced Friday that it has filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code, per an internal memo confirmed by the Wall Street Journal

President, Craig Amazeen:

    Scout will formally announce today that it has filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. The petitions were filed last night in the U.S. Bankruptcy Court for the Southern District of New York.

    Scout's board of directors unanimously determined that a sale through the Chapter 11 process under Bankruptcy Code section 363 is in the best interest of the company, employees, publishers, customers, creditors and stakeholders. The process allows Scout to continue normal business operations while orchestrating an orderly restructuring of the company and continuing the already-in-motion sales process.

    Important notes:
    – I will send out additional information as the day progresses including an expected press release.

    – We will have an all publisher / employee / contractor call early next week

    – This is all being handled at the corporate level and will not impact our day to day operations. So for the benefit of our millions of users – please continue to operate in a "business as usual" fashion, providing the fantastic content and communities that they've come to expect.

    – Any media requests / sales process requests / or other outside inquiries should be directed to (redcacted)

    Additional details later today.

    Thank you for your continued, united efforts.


WSJ had more insights having read the filing:

    "According to court papers filed Friday with the U.S. Bankruptcy Court in Manhattan, a "perfect storm of an unsustainable balance sheet" as well as financial pressures caused by the abrupt departure of the company's chief executive left the ailing business with no choice but to try to place its assets in the hands of a new owner as quickly as possible.
     Scout Media has been exploring the possibility of a sale since September, court papers show, but no formal offers have materialized. With the help of a consultant, the company contacted 154 potential buyers, of which 20 have expressed interest but haven't put forward bids.

    Amid the marketing process, a group of creditors sought to push Scout Media into bankruptcy. LSC Communications Inc., which says it is owed a judgment for $672,000 for unpaid printing services, and two vendors joined in signing the petition.

    In papers filed in bankruptcy court, lawyers for the company have proposed a court-supervised process in which bids for Scout Media's assets would be due Jan. 17. An auction would be held in Wilmington, Del., Jan. 19, with a hearing to approve the winner scheduled for the following week. U.S. Bankruptcy Judge Michael Wiles will oversee the auction process, a fixture of chapter 11 sales that is meant to ensure the company receives the best possible offer for its assets.

    Following the auction, the company says it plans to wind down. Proceeds from the proposed sale could one day be used to repay its creditors, at least in part. In court papers filed Thursday, Scout pegged its total assets and liabilities each between $10 million and $50 million."