Questex Files for Chapter 11 Bankruptcy

B-to-B publisher Questex filed for chapter 11 bankruptcy. It handled publications in a number of industries, including "technology, telecommunications, beauty, spa, travel, hospitality, leisure, home entertainment, landscape design, building services and natural resources.":

In a statement this afternoon, Questex Media Holdings Group said it had reached an agreement with senior lenders to reduce the company debt and provide “significant financing” to continue operations. Questex says that day-to-day operations will not be affected by the filing or the restructuring, and no job losses or magazine closures were expected.

Its ad pages declined by about a third in the first half of 2009, compared to 2008.

Doubledown Writers Face Bad News

Anyone who was writing for Doubledown Media knows that the company has been in bankruptcy. Now, the bankruptcy process can be a beautiful thing, even when you're talking about liquidation. A court supervises the sale of assets and distributes the money among those who are owed. You don't get the full value by any means -- maybe only pennies on the dollar. But it's something. A client of mine went bankrupt a couple of years ago and I've realized at least 40 percent of what I was owed. That's much better than a goose egg.

However, this process depends on the courts being able to sell assets. And that's the bad news for Doubledown creditors, including writers. According to Folio, at an auction last week, there were no "acceptable" bids for any assets, even including the customer lists:

According to the auction notice, the minimum bid for Doubledown’s Dealmaker was $100,000. For Corporate Leader and Trader magazines the lowest acceptable bid was $50,000. The minimum bid for Cigar Report was $25,000.

Corporate Air, meanwhile, carried a minimum bid of $55,000. Doubledown previously received an offer from a company called Private Air Media—which is headed by the magazine’s founder Dee Dee Morrison—and Knight Images Inc., for $50,000.

These are pretty low numbers as it is, so I suspect the chance of writers recouping any significant amount are next to nothing. My sympathies to those who were screwed.

Eleven Tips for Dealing with Bankrupt Clients

InnoVision Health Media, publisher of such titles as Natural Solutions and Alternative Therapies in Health and Medicine, reportedly filed for bankruptcy a few weeks ago. Although I'm no expert in the subject, I did have to deal with the bankruptcy of the parent of Pages Magazine. Here are a few tips I learned in the process:

• Do some research. Go on the web and find information written by lawyers/law firms whose practices are bankruptcy. This is a specific and intricate legal area, and a general business lawyer is not going to have the answers you need. Neither will friends, family, or other writers. Looking for help on some discussion site is a good way to thoroughly screw yourself, because if you don't do what is necessary, you could end up not getting a dime of what you are owed.
• File early. Don't wait until the very end. I know that the courts have to wait until the official filing deadlines, but there's no harm in getting your claim in early. If there are any problems, you'll have beaten the rush and you might have an easier time getting answers. Wiht Pages, I actually filed the minute I heard about it and didn't wait for the official notice.
• Find out what court is handling the bankruptcy. The bankruptcy courts handle specific geographic regions, and the governing factor is the state in which the company is incorporated. For many, that means Delaware. If you've received a notification, it will indicate the proper court. If you haven't, the company (or possibly a quick web search) should be able to tell you.
• Find the trustee. In any bankruptcy, there will be a company that handles the process - a trustee. This company supervises payments and handles the business of bankruptcy. It can give you definitive answers, even if the bankrupt company itself seems confused.
• You are an unsecurted creditor. That means you're lower on the payment priority than copmanies whose debt was secured with some sort of goods or inventory. That's just the way it is. You don't sell a physical product, and so cannot have a legal lien on that property.
• Fill out the paperwork completely. Yes, it's a pain to pull together all outstanding invoices and to fill out forms, but do it. The amount of time it takes is a lot less than you're thinking, and the upside is that you will get at least a portion of the money you're owed.
• Be ready for demands that you return recent payments. Trustees can demand that anyone paid within 90 days before the official bankruptcy filing return what they were paid, because that is considered a "preferred" payment, and the bankruptcy laws are set up to keep one creditor from getting an unfair advantage over another. If you do get such a notice, do not ignore it. You don't want the trustee, who enjoys the support of the court, to come after you. Instead, answer the demand.
• Don't expect to get everything you're owed. You'll only get some fraction of the money you had invoiced, so unleash your cry of outrage and get it over with. You're interested in getting something rather than nothing. It sucks, you're taking it in the wallet, that's life. It happens to many of us.
• Ignore the offers to buy your claim. There are companies that probably make a very nice living taking the public lists of creidtors for companies (including the totals owed) and making offers, starting at probaby 10 to 15 percent and maybe inching up when you don't bite the first time. Realize that they're not being nice and if they offer to give you 25 percent, they're expecting that your claim will be with 35 percent at least. (That would be a 40 percent return on their investment, which isn't bad at all.) Given that the total amount will be low, you're not getting any real advantage, because by the time you're getting the offers, you've already moved on by force of circumstances, because you've long had to make up your cash flow shortage. So let them troll after some other unfortunate and be patient, though getting your money can take months and months and months.
• Payments can come in parts. Depending on the conditions of bankruptcy, the trustees are probably disposing of assets to free up cash. This takes time. For example, the owner of Pages filed for bankruptcy early in January 2007. I received a third payment some time in the summer of 2008, and for all I know, there may be an additional one coming. All in all, I got at least a third of what I was owed. So if you are moving, make sure the court and trustee has your current contact information.
• Ongoing business may be acceptable. Once a client goes bankrupt, you could be reasonably concerned about doing business with it. However, in the case of a Chapter 11 bankruptcy, which means reorganization (unlike Chapter 7, which is a liquidation of assets), the courts have already put the debts to one side and payments for ongoing work are considered separately. So any work done for the company after the filing goes into a separate category and doesn't go into the queue with old debt.

Ziff Davis Media Files for Bankruptcy

The Associated Press reports that technology publisher Ziff Davis Media filed for bankruptcy yesterday. It's a sign of where some areas of publishing are headed - into the financial toilet. ZD has shown shaky finances over the last few years, and pay has been getting tighter. Obviously, it was for a reason:

New York-based Ziff Davis said in a court filing that it had about $500 million in liabilities and $313 million worth of assets, as of the end of December. It filed for Chapter 11 protection to restructure debt that had become burdensome.

Senior creditors - in other words, people other than writers, photographers, and photographers - are writing off a big chunk of the $225 million they are owed and getting at least 88.8 percent of the company's common stock as a result.

As for the more junior creditors owed a collective $275 million, the company will use the courts to resolve what they owe, and the courts have set aside $24.5 million to fund ongoing operations during the case and after it concludes.

Condolences to anyone who's been doing business with them. If you have invoices outstanding, I'd *strongly* suggest that you read up on bankruptcy, find out where they've filed, and start the necessary paperwork right away. If you are expecting pay, know that the courts will keep them from sending checks to anyone. Going forward, while the court has set aside operating capital, be sure that you can and will be paid, and know that there may be some supervisory authority that will have to review and authorize payments.

You can get burnt badly under the right (or wrong) circumstances, so if ZD is a big client, it would be wise to diversify immediately.

Update

I've heard through the grapevine that Ziff Davis Enterprise is not part of Ziff Davis Publishing and is, instead, owned by a venture capital group. If you're working for ZDE, you're not in the same boat.