Vice Media Group Files For Bankruptcy

Vice Media Group, the company behind popular websites Vice and Motherboard, has filed for bankruptcy protection in order to facilitate its sale to a consortium of lenders. The move comes after years of financial struggles and the departure of key executives.

The bankruptcy filing reflects the challenging period faced by many technology and media companies, which have been forced to cut costs amid a weak advertising market and slower economic growth.

The lender consortium, including Fortress Investment Group, Soros Fund Management, and Monroe Capital, has agreed to provide approximately $225 million in a credit bid for almost all of Vice's assets, while also assuming significant liabilities upon closing.

By utilizing a credit bid, the creditors will exchange their secured debt for the company's assets, rather than paying cash. Vice has listed its assets and liabilities in the range of $500 million to $1 billion.

Chairman of investment firm Great Hill Capital, Thomas Hayes, noted that the creditors are taking control of Vice at a considerable discount and the success of the company will depend on whether it can become financially viable with a leaner capital structure post-bankruptcy.

Vice, once part of a group of rapidly growing digital media ventures with high valuations, gained prominence under the leadership of co-founder Shane Smith, who expanded the company from a single Canadian magazine.

To fund its operations during the sale process, Vice has obtained commitments and consent from lenders, allowing it to utilize over $20 million in cash, which it believes will be more than sufficient.

In recent restructuring efforts, Vice announced the cancellation of its popular TV program "Vice News Tonight" on April 27 as part of broader changes to its news division. Similarly, BuzzFeed revealed the closure of its news division a week prior.

Hayes commented that the current industry climate, combined with challenges in raising equity due to higher interest rates, is pushing some smaller players out of the market.