By Stephanie Gleason
Of DOW JONES DAILY BANKRUPTCY REVIEW
Ambassador Media Group, a New York publisher of yellow-pages directories, filed for Chapter 7 bankruptcy Friday, saying no payout is expected for unsecured creditors.
The unsecured creditors are owed $3.5 million, most of which is due to a secured claimant from a prior bankruptcy case. The company made a trip through Chapter 11 bankruptcy in 2009, which reorganized Ambassador Media by paying some debt in cash upfront and set up payment plans for other debt.
Chief Executive Kathy Hipple, along with three other investors, contributed $121,000 in cash to be divided immediately between secured claimants RZB Finance and R.R. Donnelley & Sons Co. (>> R.R. Donnelley & Sons Company). Hipple was awarded majority ownership in the company, while RZB Finance was given a 15% stake. R.R. Donnelley was to get the rest of its claim plus interest in eight years.
R.R. Donnelley is still owed more than $3 million, according to court documents, which list the company as an unsecured creditor.
In Friday's Chapter 7 filing, which usually signifies a company's intent to liquidate, Ambassador Media claimed $4.6 million in assets and $10.4 million in liabilities, but didn't provide further information about its reason for filing for bankruptcy again.
However, a comparison of Ambassador's 2009 court documents and the petition filed Friday with the U.S. Bankruptcy Court in Manhattan shows a dramatic decline in income over the past years.
Its financial statements, included with the new Chapter 7 filing, show $8.8 million in gross income for 2011 and $2.3 million so far for 2012.
Gross income in 2007 was $26.4 million, according to court documents filed during its Chapter 11 case. In 2008, that fell to $20.8 million, which yielded a net loss $2.5 million. It blamed those losses on its new Internet division, saying that its print operations were profitable and brought in $350,000 in 2008.
Ambassador filed for bankruptcy shortly in July 2009 with $8.7 million in assets and $19.1 million in liabilities.
Neither Ambassador Media nor its lawyer returned request for comment Monday.
Although the yellow-pages industry has been hurt badly by the public's transition to virtual information, Ambassador Media tried to keep up with the times and announced a strategic partnership with Google Inc. (GOOG) in 2008.
In a press release announcing the partnership in April 2008, the company called itself an "early adopter of evolving online search technologies" and said it was the first to have a sales force dedicated to selling paid Internet searches.
Google sued Ambassador for $1 million plus interest for labor and materials that Google said it provided through to May 31, 2008. It isn't clear whether Ambassador still has any relationship with Google, but according to its website, the company continues to provide search-engine marketing.
The Manhattan-based company also produces yellow pages for the Brooklyn, Bronx, Manhattan, Nassau, Queens, Staten Island and southern Westchester markets.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
-Stephanie Gleason, Dow Jones Daily Bankruptcy Review; 202-862-1347; [email protected]