Hollinger Inc.'s Magazine Company Files for Bankruptcy Leaving $10-Million Debt

Strategic Insights -

Toronto-based magazine company, Inside Guide Magazine Ltd., which was controlled by Hollinger Inc. until February, has filed for bankruptcy. The company, which had no staff but held contracts to publish Canadian and Acumen magazines for Canadian Airlines International Ltd., has left debts of more than $10-million. Secured creditor Canadian Imperial Bank of Commerce (CIBC), of which Conrad Black is a director, is owed $6.5-million, while unsecured creditors are owed over $1-million, including $371,838 to Quebecor Printing Inc.

Key Takeaways:

  • Inside Guide Magazine Ltd. filed for bankruptcy in June, with debts exceeding $10-million, including $6.5-million owed to secured creditor CIBC.
  • The company had been operating in the red since its incorporation in 1989, with losses of $870,431 last year on sales of $2.4-million.
  • CIBC allowed the company to exceed its $1.5-million authorized line of credit by about $4-million in the past two years, while Hollinger Inc. guaranteed $2.1-million of Inside Guide's debt to CIBC.
  • The sale of Hollinger's 51-per-cent stake in Inside Guide to an undisclosed buyer in February for a nominal amount did not save the company from bankruptcy.
  • Synergism Marketing and Communications Inc., which owns 49 per cent of Inside Guide, laid off about 20 workers due to the bankruptcy, and Canadian Airlines cancelled its contract with Inside Guide this spring.
  • Unsecured creditors, including Quebecor Printing Inc., are owed over $1-million.

Statistics:

  • $10-million: the amount of debt left by Inside Guide Magazine Ltd. after filing for bankruptcy.
  • $6.5-million: the amount owed to secured creditor CIBC.
  • $1.1-million (estimated): the amount of realizable assets, including accounts receivable and office furniture.
  • $4-million: the amount by which CIBC exceeded the company's authorized line of credit.
  • $2.4-million: the sales revenue of Inside Guide in the year preceding bankruptcy.
  • $870,431: the amount of losses incurred by Inside Guide in the year preceding bankruptcy.
  • $2.1-million: the amount guaranteed by Hollinger Inc. of Inside Guide's debt to CIBC.
  • $51 per cent: the stake sold by Hollinger Inc. to an undisclosed buyer in February.

Sources:

  • Bankruptcy records.
  • The Globe and Mail: "A small Toronto magazine company, which Conrad Black's Hollinger Inc. controlled until last February, has gone bankrupt, leaving debts of more than $10-million."
  • The Globe and Mail: "Inside Guide Magazine Ltd., which had no staff but once held contracts to publish Canadian and Acumen magazines for Canadian Airlines International Ltd. of Calgary, filed an assignment in bankruptcy this month and Doane Raymond Ltd. has been appointed trustee."
  • The Globe and Mail: "Secured creditor Canadian Imperial Bank of Commerce, of which Mr. Black is a director, is owed $6.5-million."
  • The Globe and Mail: "The sale was for a nominal amount, said Jack Boultbee, Hollinger's vice-president of finance and treasury."
  • The Globe and Mail: "Neither Inside Guide president Grant Geall nor Hollinger will say who the new owner is."