09/17/2009 05:12 am ET Updated May 25, 2011

Reader's Digest To File For Chapter 11 Bankruptcy Protection

By Associated Press

NEW YORK - The publisher of Reader's Digest, the country's most popular general interest magazine, said Monday it will seek Chapter 11 protection from creditors amid declining circulation, an industrywide advertising slump and large debts.

Reader's Digest Association Inc. said it has reached an agreement with a majority of secured lenders to restructure its debt. Under the plan, the lenders get ownership of the company and will erase much of the $1.6 billion they have in senior secured notes.

The monthly magazine, founded in 1922 as a collection of condensed articles from other publications, has been searching for a niche as the Internet upends the magazine industry's traditional business models.

This year, it cut the circulation guarantee it makes to advertisers to 5.5 million, from 8 million and lowered its frequency to 10 annual issues from 12.

The magazine was bought by the New York private equity firm Ripplewood Holdings in 2007.