At the end of August this year, newspapers reported about the bankruptcy of Reader’s Digest. The magazines with inspirational family stories of the Reader's Digest Association Inc, are famous all over the world. This company was bought in 2007 by an investor group, led by Rippelwood Holdings LLC and from that moment, the managers tried to cut costs. This didn’t work out very well, so in Augusts 2009, they planned to file for bankruptcy for its U.S. businesses, in order to diminish the debts by 75 %. The current debt of 2.2 billion dollars, would be reduced to 550 million dollars. On that very moment, there was already a prearranged plan with all the creditors for a restructuring plan. This plan didn’t provide a lot of redundancies. The operations in other countries (f.e. Canada, Australië, Europe, Africa, Asia,…) were not affected.
This is a very good example of a restructuring of a international company. They made fundamental choices to survive. I think the economic recession has everything to do with his restructuring: people who want to read something, will now more search on the Internet, because that’s for free. The fact that the company will develop a more digitally focus, is a very good example of that.
Sources:
CHELSEA, E. (August 17, 2009). Reader's Digest plans prearranged bankruptcy. Retrieved from http://www.reuters.com/article/wtUSInvestingNews/idUSTRE57G37B20090817?pageNumber=2&virtualBrandChannel=10522
OSTROW, A. (Augusts 17, 2009). Reader’s Digest headed for bankruptcy. Retrieved from http://mashable.com/2009/08/17/readers-digest-bankruptcy/
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You will need some nerve, to change your vision and your working method as a big company. But companies have to do this sometimes also in times of difficulty. The company in this article is indeed a good example of it. It is of course not always that simple because you are still taking a risk. We already learned in the HRM-lessons that a company need to look forward and to consider with all the possible changes it could have in the future. If you don’t do that, there is a big chance that your company will go bankrupt.
(By Hanne Snoeck)
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