Owner of The Journal Record files for bankruptcy

In
a statement, the company said the filing in U.S. Bankruptcy Court would
allow it to continue to honor obligations to its employees, customers
and vendors. 
As a part of the bankruptcy filing, the company’s founder and CEO, James P. Dolan and COO Scott Pollei have resigned.

The Journal Record President and Publisher Mary Mélon’s only comment was that the The Journal Record is not going away.

The
pre-packaged Chapter 11 filing will reportedly cut the company’s debt
by about $100 million. As a result, shareholders of The Dolan Company
will receive no compensation.

The
company’s e-discovery business, DiscoverReady LLC, is not a part of the
bankruptcy filing, and Dolan reported it will continue to operate that
business and does not expect the filing to have an impact on those
operations.

In
late January, the company reported its common stock and preferred stock
had been delisted by the New York Stock Exchange because the average
closing price was below $1 for a consecutive 30-day trading period. At
that time, the company said it planned to continue trading on the
over-the-counter market under the symbol DOLN for common stock and DOLNP
for preferred stock.

A
sizable portion of The Dolan Company’s revenue model was built around
providing foreclosure services. As a result of questionable foreclosure
procedures disputed by the mortgage processing industry, foreclosures were
drastically reduced in favor of loan modifications. As a result, Dolan’s
company was unable to meet expectations and began to rack up debt. 

The company reported it expects the filing to reduce its debt from just over $150 million to about $50 million.

“The company remains well
positioned in its core markets. This reorganization step is necessary to
unlock these current businesses from the weight of debt principally
associated with its previous mortgage foreclosure processing
businesses,” said Kevin Nystrom, the company’s chief restructuring
officer. “The company and its lenders are committed to the customers,
employees and vendors and want to secure a bright future through this
process.”

Gazette staff

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