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 build around providing foreclosure services. As a result of questionable foreclosure procedures disputed 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.”