Vice Media Formally Files for Chapter 11 Bankruptcy

Patrick Frater and Todd Spangler
·5 min read

Struggling media company Vice Media Group said on Monday it had filed for Chapter 11 protection to facilitate its sale to a subset of its backers.

The company said in a court filing that it listed both assets and liabilities in the range of $500 million to $1 billion (available at this link). According to Vice Media, substantially all of the company’s international entities and the Vice TV joint venture with A+E Networks are not part of the Chapter 11 filing.

More from Variety

In a statement, Vice said that it had agreed to the terms of an asset-purchase agreement with a consortium of lenders. These include Fortress Investment Group, Soros Fund Management and Monroe Capital. The consortium agreed to provide total purchase consideration of approximately $225 million in the form of a credit bid for substantially all of the company’s assets, in addition to the assumption of significant liabilities upon closing. In addition, Vice secured commitments for debtor-in-possession financing from the lender consortium, as well as consent to use more than $20 million of cash that constitutes the cash collateral of the lender consortium. Vice once carried a $5.7 billion valuation back in 2017.

The lenders will serve as “stalking horse” bidders, which means that other potential buyers will have an opportunity to submit bids. The winning bid (or bids) will be subject to approval by the bankruptcy court.

In announcing the restructuring, Vice said it expects to “emerge as a financially healthy and stronger company” and said it is “operating as usual and remains focused on producing and delivering premium content and services“ across all its businesses worldwide. Vice said it anticipates that the financing and cash generated from ongoing operations will be “more than sufficient” to fund its business throughout the sale process, which it expects to conclude in the next two to three months.

“This accelerated court-supervised sale process will strengthen the company and position Vice for long-term growth, thereby safeguarding the kind of authentic journalism and content creation that makes Vice such a trusted brand for young people and such a valued partner to brands, agencies and platforms,” Vice co-CEOs Bruce Dixon and Hozefa Lokhandwala said in a statement.

They continued, “We will have new ownership, a simplified capital structure and the ability to operate without the legacy liabilities that have been burdening our business. We look forward to completing the sale process in the next two to three months and charting a healthy and successful next chapter at Vice.”

Vice said it filed several customary first-day motions with the U.S. Bankruptcy Court for the Southern District of New York seeking authorization to support its operations during the court-supervised sale process, including the continued payment of employee wages and benefits without interruption and the “payment to vendors and suppliers on normal terms for goods and services provided on or after the filing date.” The company added that it expects to receive court approval for the requests. Vice Media launched a website (vmgrestructuring.com) with additional info on the bankruptcy and reorg.

Monday’s announcement appeared to confirm many of the details of a proposed Chapter 11 scenario that emerged 10 days ago.

Cash-strapped Vice Media has been searching for a buyer over the past year, to no avail. In February, Nancy Dubuc announced her exit as CEO after almost five years. The company subsequently appointed longtime execs Dixon and Lokhandwala as co-CEOs.

Last month, Vice Media made layoffs in its news division and said it was pulling the plug on “Vice News Tonight,” its nightly show on Vice TV that had previously aired on HBO. In March, Jesse Angelo, Vice Media’s global president of news and entertainment, said he was exiting to form his own media and consulting outfit.

Vice Media Group’s five main business units are: Vice.com, the Vice Studios film and TV production unit; the Vice TV television network; Vice News; and creative agency Virtue. The company’s portfolio also includes Refinery29, the media and entertainment brand focused on women acquired in 2019; London-based Pulse Films; and i-D, a digital and print style publication covering fashion, culture and design.

For Vice Media, Togut, Segal & Segal and Shearman & Sterling are serving as legal counsel, PJT Partners/LionTree are serving as financial adviser and AlixPartners is serving as restructuring adviser.
Gibson, Dunn & Crutcher is legal counsel to the lender consortium and Houlihan Lokey is serving as financial adviser.

Here is an internal memo sent to Vice employees by Morgan Hertzan, president global TV.

As you are aware, over the last several months, our Board and management team have been evaluating a range of strategic options with the ultimate goals of improving our financial health and protecting the long-term viability of VICE. As part of that effort, today we announced that VICE has entered into an agreement with our lenders, including Fortress, Soros Fund Management and Monroe Capital, under which VICE will be acquired by these investment companies. This agreement positions us to achieve those goals and ensure that VICE will continue to produce and support the ground-breaking journalism and content creation with which we have become synonymous. 

To facilitate this transaction, we have commenced a court-supervised sale process under Chapter 11 of the U.S. Bankruptcy Code. The lenders will serve as “stalking horse” bidders, which means that other potential buyers will have an opportunity to submit bids. The winning bid or bids will be subject to approval by the Bankruptcy Court. 

Throughout the process, VICE’s operations will continue in the ordinary course of business, as we work with valued partners like you to produce and deliver award-winning content across platforms. There are two additional, important points we want to share today:

1.       We have sufficient liquidity to support our continuing operations. VICE has obtained commitments for debtor-in-possession (“DIP”) financing from the Lender Consortium, as well as consent to use more than $20 million of cash that constitutes the cash collateral of the Lender Consortium. VICE anticipates that this financing, as well as the cash generated from ongoing operations, will be more than sufficient to fund its business throughout the sale process

1.       We intend to complete the sale process as quickly as possible, likely in the next two-three months. We will keep you apprised of the timeline, but we fully expect a prompt completion of the sale and emergence from bankruptcy.

This agreement is a positive step forward for our business. We are proud to partner with you as we continue to our large global audience with a unique brand of news, entertainment and lifestyle content, and we look forward to continuing our partnership well into the future. Thank you for your continued support.

Best of Variety

Sign up for Variety’s Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.

Click here to read the full article.