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for bankruptcy
Creditors shove pornster up against the wall
So now we know what Bob Guccione has been up to these past couple weeks.
General Media, a subsidiary of Penthouse International Inc. and publisher of Penthouse magazine, revealed yesterday that it has filed for bankruptcy under Chapter 11.
The filing, made in U.S. Bankruptcy Court in Manhattan, will allow General Media a chance to restructure its tens of millions of dollars in debt, the servicing of which has become increasingly difficult in recent years as Penthouse’s revenues have dwindled sharply.
But it also sends a signal to those who have been awaiting what they see as Penthouse’s inevitable collapse: The end may at last be near.
Guccione, who owns 85 percent of Penthouse International and General Media, has avoided reporters in recent weeks as Penthouse’s financial crisis has come to a head.
Kennedy Funding, a Hackensack, N.J., based real estate lender, has been threatening to foreclose on Guccione’s $37 million Manhattan residence unless he pays up on a $15 million loan. The deadline for repayment slid by last Tuesday without comment from either party.
Last month, Newsweek reported that Penthouse had reduced its employees' paychecks by 75 percent and skipped canceled publication of at least one issue, unable to pay its printer. According to another report, Penthouse’s landlord has gone to court to evict it from its offices for nonpayment of rent.
Once a serious competitor to Playboy, Penthouse’s business has slowly disintegrated under challenge from pornographic web sites and voyeuristic men’s magazines.
Its revenues have fallen by more than 50 percent over the past decade, to $53.8 million last year, and as of March 31 it had liabilities of $79.3 million and assets of only $15.1 million. General Media missed payments due on $41.8 million in bonds in April.
Penthouse’s auditor, Eisner LLP, quit in May after General Media omitted from a filing to the Securities and Exchange Commission Eisner’s statement expressing doubt about the company’s ability to survive as a going concern. The SEC then opened an inquiry into Penthouse’s finances for 2002 and early 2003.
Penthouse has had other problems, too: Last year it published nude pictures of a woman it claimed was tennis star Anna Kournikova. The photos turned out to be of someone else, and Penthouse was forced to settle with both women after a highly public trial.
General Media said yesterday that it has hired a chief restructuring officer: T. Scott Avila, a partner in Corporate Revitalization Partners LLC.
The company also said it plans to publish the August issue of Penthouse.
August 13, 2003© 2003 Media Life
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