Penthouse Files for Chapter 11 Bankruptcy

LOS ANGELES—Penthouse Global Media has filed for Chapter 11 bankruptcy protection.

In the filing Thursday in the US Bankruptcy Court Central District of California, Penthouse lists estimated liabilities of between $10-50 million and assets of between $1-10 million.

Among Penthouse’s top creditors are a pair of law firms, Greenberg Traurig, LLP and Bayard, P.A., who are owed more than $198K and $121K, respectively. Two accounting firms—TGG Accounting and Squar Milner LLC—and the law firm Hogan Lovells US, LLP are also listed among the company’s five biggest creditors, with each due more than $50K.

A case filed under chapter 11 of the US Bankruptcy Code is typically referred to as a "reorganization" bankruptcy because it allows the debtor to propose a plan for profitability post-bankruptcy. 

CEO Kelly Holland acquired the Penthouse brand in February 2016 from FriendFinder Networks—she was managing director and president for Penthouse's broadcast operations before the acquisition.

In a statement, Holland said, “During the previous two years we have revitalized the publishing division by re-styling both Penthouse Magazine and Penthouse Letters. Additionally, we have re-introduced OMNI Magazine, the classic magazine of science and science fiction, with an eye to launching broadcast media projects based on the brand. Our global broadcast operations remain strong and we are in development on several licensing initiatives. 

“Penthouse is fully focused on the future and does not expect to experience any material disruptions. The company is operating business as usual and remains fully committed to providing the same content and services fans have come to expect. So why is Penthouse taking this action? While its business is healthy and performing well it needs to address its debt and interest expense. This restructuring will help position the company for long-term growth.”

Holland continued, “We intend to use this process to streamline and strengthen our business both operationally and financially so that we have the financial flexibility to continue to make necessary investments in our operations.”

According to the company, PGMI has secured commitments for DIP financing to ensure there are no interruptions to the existing business operations or customer services and deliveries. The company said it is establishing a long-term capital base with a select number of investors and these steps will enable it to more efficiently transition from its existing lenders to a new capitalization structure that will allow for focus on new development initiatives.

“All of our publications, broadcast operations, digital media presence and licensing will continue uninterrupted and given our strong brand recognition, large customer base and dedicated fan loyalty we are positioned for strong growth in the upcoming months," Holland added.

Originally founded by the late Bob Guccione in 1965, Penthouse began publishing its monthly magazine in North America in 1969 in an attempt to compete with Playboy. This week’s filing marks the third time in Penthouse’s history it entered into Chapter 11. In August 2003, General Media, then parent company of the magazine, filed for bankruptcy protection. Three months later it was announced that Penthouse magazine was being put up for sale as part of a deal with its creditors. A year later in November 2004, Guccione resigned as Chairman and CEO of Penthouse International, the parent of General Media.

Penthouse also filed for bankruptcy protection in September 2013, when the magazine's owner FriendFinder’s common stock was no longer traded on the open market. In August 2013, FriendFinder’s stock was delisted from Nasdaq because it consistently failed to trade for more than $1.