Reader's Digest UK in administration

Publishing company Reader's Digest, famed for its magazine of the same name, has gone into administration in the UK, putting 117 jobs at risk.

The decision comes after talks between the company's US parent group and the UK Pensions Regulator broke down.

The dispute centred on how to pay down a £125m deficit in its UK pension fund.

Administrators said the UK magazine, which has more than 540,000 subscribers and was founded in 1938, would continue to trade while a buyer was sought.

Reader's Digest had agreed a deal with the Pension Protection Fund to pay off a small part of the deficit, but the regulator vetoed the agreement.

As a deal could not be done, the UK publisher said it would not be able to meet its pension obligations and so could not sustain operations.

Prize draws

The first edition of Reader's Digest was published in the US in 1922.

Having begun as a collection of condensed articles, it started to include original content and is now mostly made up of specially commissioned pieces.

More recently it became known for its prize draws. The administrators said last week's draw took place as scheduled, with the prize fund kept in a trust, but arrangements for future draws were to be reviewed.

The magazine also became associated with free gifts - from pens and alarm clock radios to encyclopaedias - as it looked to lure new readers.

However, Reader's Digest has failed to shake off its image as a publication favoured by older people and in dentists' and doctors' waiting rooms.

Despite attempts to modernise, including launching an online edition, its readership in the UK has fallen dramatically from about two million in the 1990s.

The company says Reader's Digest is the largest-selling subscription magazine in the world. The group also sells books, other magazines, recorded music and home videos.

Cash flow

The pensions crisis is just the latest problem to hit the publisher.

The US parent group, Reader's Digest Association (RDA), filed for Chapter 11 bankruptcy protection last year after struggling with interest payments on a $2.2bn (£1.4bn) debt. It now expects to come out of Chapter 11 shortly.

The UK arm had experienced a cash flow problem for some time, a company spokesman said, and this had been exacerbated by higher-than-normal contributions to the severely underfunded pension fund.

Its more than 100 UK employees are employed in Swindon and Canary Wharf.

Posted at 09:00PM Feb 17, 2010 by Kelly Board in Insolvency  |  Comments[0]

Ithaca Due to Close

Ithaca, one of the trendiest bar-restaurants in Manchester, boasting an A-list clientele including the Beckhams and Kanye West is preparing to shut down.  The revelations comes just two months after  new investors came in following their holding company going in liquidation in November.

The new investors had apparently given the business a ‘new lease of life’ and had been planning an expansion programme, broadening their venues overseas into Dubai as well as adding more properties in the UK. 

The holding company, Ithaca Manchester Ltd went into liquidation owing around £1.9million, mainly to Natwest Bank and HM Revenue & Customs.  This forced them into Creditors Voluntary Liquidation and the no investors haven’t had any better luck since coming in and now they are planning a ‘last hurrah’ with a closing down party due shortly.

The initial business was aimed at Manchester high fliers, however plans had been to turn it into a more realistic and affordable venue whilst still maintaining its luxury image.  It has been said that they had been in talks with other potential investors, including various Premier League footballers with a view to another takeover, however these talks have fallen through.

A spokesman from the business said that they planned to go out on a high and this has been made possible with the restaurant winning ‘Best Manchester Restaurant’ at the Hi-Life Dining Awards earlier in the month.

Apparently, there are talks of the business being re-launched in 2011 on a smaller scale with the venue likely to be in Cheshire.

A further statement from the assistant manager has said that the final nail in the coffin so to speak was the cold snap hitting the country in January.  This heavily offset the projected sales figures that were hoped may save them.  

Posted at 11:28AM Feb 17, 2010 by Marc Stenton in Insolvency  |  Comments[0]