Founded in 1965, Bob Guccione's debt-ridden porn empire, a once-powerful icon of old-school print pornography, has faced tough times in recent months competing with the age of Internet porn and keeping control of its advertisers.
On the heels of filing for Chapter 11 in August, General Media Inc., publisher of Penthouse Magazine, is formally up for sale after its creditors filed a motion to convert the porn empire's Chapter 11 filing to a Chapter 7 and sell off its assets.
General Media is a subsidiary of Penthouse International, Inc.
Robert Feinstein, a lawyer representing the bankruptcy filing, told XBiz that the motion to convert was filed last week but was withdrawn, forcing Penthouse onto the sale block.
According to Feinstein, General Media is currently in talks with various adult entertainment companies regarding the sale of the Penthouse title, its assets, and Internet businesses, although he would not comment on specifics.
Adult industry experts have predicted ever since Penthouse started missing publishing dates earlier this year that the adult men's magazine was not long for this world. It is also being said that Penthouse's strong bent toward hard-core content will make it a difficult sale.
Playboy Enterprises and Hustler have so far not expressed interest in acquiring the magazine's assets.
Earlier this month General Media failed to pay a $2 million note against pending creditor debt of $40 million. The notes' covenants require General Media to maintain a net worth of at least $81.6 million. The company also owes about $15 million to unsecured creditors.
General Media filed for Chapter 11 protection on Aug. 12 of 2003 in the U.S. Bankruptcy Court for the Southern District of New York.
Concurrent with its Chapter 11 filing, General Media also closed a $5 million debtor-in-possession line of credit with some of its secured bond holders.
At the time, the company's facilities remained operational while it sought to restructure operations, debt obligations, and propose a plan of reorganization for filing with the court in the near future.
Feinstein told XBiz that under the rules and regulations of General Media's bankruptcy filing, the sale of the Penthouse title will be completed by the end of January 2004.