Vice Media enters bankruptcy

August 2023 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

August 2023 Issue

Vice Media Group has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Southern District of New York.

The company, which has a slate of news, technology and lifestyle websites, stated in its filing that it had assets and liabilities worth between $500m and $1bn.

Furthermore, the company also noted that a group of creditors, which includes Fortress Investment Group, Soros Fund Management and Monroe Capital, had made a conditional credit bid for “substantially all of the company’s assets”. The lenders had agreed to provide approximately $225m and would assume “significant liabilities” upon closing of the deal. Under a credit bid, creditors can swap their secured debt, rather than pay cash, for the company’s assets. Vice said it “expects to emerge as a financially healthy and stronger company” when the process concludes.

Vice has also obtained commitments for debtor-in-possession (DIP) financing from its lender consortium, as well as consent to use more than $20m of cash that constitutes the cash collateral of the lender consortium. The company expects this financing, as well as the 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.

According to the terms of Vice’s bankruptcy loan, the company has 55 days to complete a sale. Vice said that the timeline to sale, “while tight”, is necessary “to best position the company to survive as a going concern”.

The bankruptcy will not interrupt daily operations for Vice’s businesses, which in addition to its flagship website include the ad agency Virtue, the Pulse Films division and Refinery29, a women-focused site acquired by Vice in 2019.

“VICE serves a huge global audience with a unique brand of news, entertainment and lifestyle content,” said Bruce Dixon and Hozefa Lokhandwala, co-chief executives of Vice. “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.

“We will have new ownership, a simplified capital structure and the ability to operate without the legacy liabilities that have been burdening our business,” they continued. “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.”

In April, the company – which had been exploring strategic alternatives since its plans to float using a special purpose acquisition vehicle (SPAC) collapsed two years ago – announced it was cancelling its popular Vice News Tonight as part of a restructuring that could make more than 100 staff members redundant. The company also said it would end its Vice World News brand.

In February, Fortress, the company’s debt holder, extended a $30m funding line to let Vice pay overdue bills to vendors. The same month, Nancy Dubuc, who took over as chief executive from the company’s co-founder Shane Smith in 2018, announced her surprise departure.

According to Vice’s bankruptcy filing, the company owes some of its biggest business partners millions of dollars. The company said it owed Wipro, an information technology firm, nearly $10m. Justin Stefano, one of the co-founders of Refinery29, is owed more than $500,000, according to the filings. And Davis Wright Tremaine, a law firm that has represented Vice, has a claim of more than $300,000.

The collapse of Vice comes on the heels of the closure of fellow news company Buzzfeed. In April, BuzzFeed announced the closure of the remainder of its once highly lauded BuzzFeed News operation and that it was cutting 180 staff across the rest of its business. The closure of BuzzFeed news was part of a cost-cutting drive led by its corporate parent.

Richard Summerfield