Vice Media Group, renowned for its popular websites like Vice and Motherboard, has initiated bankruptcy protection proceedings as part of its strategic plan to be acquired by a consortium of lenders. This milestone represents the culmination of years of financial struggles and the departure of key executives.
The decision to file for bankruptcy comes at a time when numerous technology and media companies are grappling with challenges, leading to downsizing efforts as a response to an uncertain economy and a sluggish advertising market.
Vice emerged as one of the leading digital media ventures, experiencing rapid growth and commanding high valuations while targeting millennial audiences. Its ascent was closely linked to the vision of its co-founder, Shane Smith, who built the media empire starting from a single Canadian magazine.
As part of a broader restructuring initiative announced in April, Vice revealed its intention to discontinue the popular TV program “Vice News Tonight,” resulting in job cuts across its global news business.
Recently, BuzzFeed Inc also encountered obstacles associated with its digital-first business model and made the decision to shut down its news division, known for its distinct and investigative reporting.
Vice has disclosed that a consortium of lenders, including Fortress Investment Group, Soros Fund Management, and Monroe Capital, will provide around $225 million through a credit bid to acquire a majority of the company’s assets. Upon completion, the lenders will assume substantial liabilities.
Through the credit bid, creditors have the option to exchange their secured debt for the company’s assets instead of making a cash payment.
According to a court filing, Vice has reported its assets and liabilities to be in the range of $500 million to $1 billion.
Additionally, Vice has secured debtor-in-possession financing commitments from the lenders, along with the consent to utilize over $20 million in cash, which it believes will be more than sufficient to sustain its operations throughout the sale process.
