AMI Restructuring Wipes Out David Pecker

National Enquirer and Star publisher American Media has, for all practical purposes, gone bust. Although they left enough wiggle room to declare a successful non-bankruptcy!

You may recall that AMI has been battling bankruptcy rumors for months, after taking on too much debt. Clearly, AMI couldn't afford to pay back what they owe. So now they've come to a resolution: handing 95% of the company over to creditors! Which means that David Pecker and the other investors who bought the company nine years ago have been left a stake that's worth next to nothing. This is, uh, "avoiding" bankruptcy:

The agreement, which reduces the company’s debt by $227.2 million, transfers ownership of 95 percent of AMI’s common stock to bondholders, the company said Sunday evening. CEO David Pecker... and Evercore Partners bought American Media in 1999 for $850 million.

Essentially, AMI's owners just recognized they couldn't pay back their debts and handed the entire company over to its lenders. Do not call this bankruptcy. No word on what the bondholders plan to do yet, but it would be a terrible time to try to sell off the company in pieces. Or as a whole, for that matter. [Folio]