Ambassador Media Group filed for Chapter 7 bankruptcy Friday, citing debts of more than $10 million and assets of only $4 million. A Chapter 7 filing usually signifies a company’s intent to liquidate. With $4 million in assets and $10 million in liabilities, the company cites a deterioration of business as cause for the filing. R.R. Donnelley was to get the rest of its claim plus interest in eight years — now R.R. Donnelley is listed as an unsecured creditor. There are no payouts expected for unsecured creditors. Tracy Kestadt, Ambassador’s bankruptcy attorney, said the New York City metro-area publisher has ceased operations.
Ambassador’s financial statements, that are included in the filing, show $8 million in gross income for 2011 and $2 million in 2012 thus far. Chief Executive Kathy Hipple, along with three other investors, contributed $121,000 in cash to be divided immediately between secured claimants RZB Finance and R.R. Donnelley & Sons Co. Hipple was awarded majority ownership in the company, while RZB Finance was given a 15 percent stake.
This is Ambassador’s second bankruptcy filing in three years. In 2009, Ambassador filed for Chapter 11. That filing reorganized the company by paying off some debt in cash upfront while setting up payment plans for other debt. Yellow Pages publishers have had a rocky start in transitioning from traditional to digital media. Ambassador is no exception. In April 2008, it announced a strategic partnership with Google to set up a sales force dedicated to selling paid Internet searches. But the deal went south once Google sued Ambassador for $1 million plus interest for labor and materials. Nonetheless, Ambassador’s website still says that it provides Google SEM.
Ambassador Media Group LLC was founded as Ambassador Publications in 1999. The Manhattan-based company produced Yellow Pages directories for the Brooklyn, Bronx, Manhattan, Nassau, Queens, Staten Island and southern Westchester County markets.