Houghton Mifflin Harcourt Publishing has published some of the most famous works in modern history from Mark Twain to J.R.R. Tolkien and now the company has filed for Chapter 11 bankruptcy in order to eliminate more than $3 billion in debt.
The Boston based company filed its case in US Bankruptcy Court in Manhattan and listed assets and debt of more than $1 billion each.
Houghton has also announced that since offering creditors stakes in the company on May 11 at least 70 percent of lenders have worked with the company to restructure its debt. Houghton Mifflin is set to have $2.85 billion worth of loans mature over the next two years.
Under the company's proposed plan Houghton's long-term bank loan and bond debt would convert to all of the equity in the reorganized company. The company also announced that shareholders would receive warrants for 4 percent of the new stock if they voted for the plan.
Aside from publishing some of the best known novels of all time the company is responsible for education materials that reach nearly 60 million students in 120 countries. Houghton Miffline Harcourt Publishing also sells materials through Amazon.com Inc.'s publishing arms, an agreement that was reached in January 2012.
Houghton has been selling reading materials since 1832. Other books sold by the company have included the likes of Ralph Waldo Emerson and the Curious George series.
Houhgton officials released the following statement on Monday:
“Today, Houghton Mifflin Harcourt filed a ‘pre-packaged’ comprehensive financial restructuring plan that will strengthen the company financially so we can continue to invest in our business and ensure we are well positioned for the future. This plan, which is supported by a majority of our key financial stakeholders, will eliminate $3.1 billion of debt through a debt to equity transaction, and reduce our annual cash interest costs. The company today lodged voluntary petitions for reorganization under Chapter 11 in the US Bankruptcy Court for the Southern District of New York. With a more appropriate capital structure to support our strategic plan and business objectives, we will have greater financial flexibility to pursue growth opportunities. Houghton Mifflin Harcourt will maintain normal day-to-day business operations throughout the restructuring process, and we expect no disruptions to our relationships with our customers, agents, authors, employees, business partners, and suppliers. Our customers will continue to receive the high quality content they have come to expect from us, and service without interruption. Additionally, our plan provides for our suppliers and vendors to be paid in full during and after this process and for our employees to continue receiving their usual pay and benefits. Because of the high level of support we have obtained from our lenders, bondholders and shareholders for our plan, we seek to complete this financial restructuring quickly, likely by the end of June 2012. "