--The company has shut down and intends to liquidate
--General deterioration of its business led to the filing
--A trustee has been appointed to liquidate the assets
(Update adds details throughout.)
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 and has already
shut down operations, blaming a deterioration of its business.
Unsecured creditors, owed $3.5 million, aren't expected to see
any payout. Most of that is owed to a secured claimant from its
2009 Chapter 11 bankruptcy case, who is still owed over $3
million.
That case reorganized Ambassador Media by paying some debt in
cash upfront and set up payment plans for other debt.
But this time the company will be liquidating, according to
Ambassador Media's bankruptcy attorney Tracy Klestadt, who said the
company has already shut down.
Ambassador Media claimed $4.6 million in assets and $10.4
million in liabilities, and Klestadt said a general deterioration
of the business was responsible for the need to shut down. A
trustee has already been appointed to begin the liquidation of
assets.
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 over the past years.
The Chapter 7 financial statements 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 afterward, in July 2009
with $8.7 million in assets and $19.1 million in liabilities.
The reorganization had Chief Executive Kathy Hipple, along with
three other investors, contribute $121,000 in cash to be divided
immediately between secured claimants RZB Finance and R.R.
Donnelley & Sons Co. (RRD). 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--now R.R. Donnelley is listed as an unsecured
creditor.
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.
But shortly after, 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; stephanie.gleason@dowjones.com