American Media, the publisher perhaps best known for its supermarket tabloids National Enquirer and Star (as well as Shape and Men's Fitness) is entering Chapter 11 -- in other words, declaring bankruptcy. The company said in a release that within two weeks, 80% of its creditors need to agree with a "prepackaged Chapter 11 filing" that would give the company 60 days to reorganize under the supervision of the courts and negotiate a way out from under its debts.
Previously, AMI had tried to exchange its debt (notes coming due in 2013) for cash and equity. Not enough creditors were willing to make the swap and the effort was abandoned. AMI Chairman, President and CEO David Pecker said
"For our advertisers, employees, customers and vendors, this short period will be business as usual, with considerable upside in the future. American Media is engaging in this strategy from a position of financial strength and confidence....Publications will function seamlessly, staff will be unaffected by the reorganization and customers should not notice any difference during the 60 day process."