RDA Holding Co., which is the parent company of Reader's Digest, announced Sunday that it has filed for Chapter 11 bankruptcy in federal court, its second in less than four years.
According to a statement issued Sunday, RDA, which was located in Chappaqua until vacating its campus in December 2010, will cut its debt by about $465 million by converting it into equity as part of a deal reached with its secured noteholders and secured lender.
The company expects to be in bankruptcy for less than six months, and to emerge with just about $100 million in debt, which represents an 80-percent drop in its indebtedness. It also announced that it plans to get $105 million in financing, including support from secured creditors.
The filing is the second of its kind in recent years. The company filed its first in 2009, which allowed for it to break a long-term lease on its Chappaqua headquarters that it signed with development partnership Summit/Greenfield, which bought the sprawling campus from the media comglomerate in 2004. Reader's Digest had owned its Chappaqua site since the 1930s.
Reader's Digest officially exited from Chappaqua in December 2010 and planned to disperse its staff to offices in New York City and White Plains.
The campus is now called Chappaqua Crossing. It includes 700,000 square feet of commercial space, is mostly empty, but has tenants including Northern Westchester Hospital, Mount Kisco Medical Group and the WeeZee children's sensory play space.
In recent years, Chappaqua Crossing has become almost synonymous with controversy in town. Summit/Greenfield spent the second half of the 2000s working on various iterations of a proposal to add multi-family housing to the site as part of a mixed use with office space. The proposal, which required rezoning from the New Castle Town Board, was highly controversial. Residents protested, arguing that the number of condos and townhouses - the developer's latest plan had 199 - would overwhelm the Chappaqua school district with new students and present a traffic problem.
In April 2011, the town board voted to approve just 111 units out of the proposed 199. Two months before the decision, Summit/Greenfield sued New Castle in federal and state courts over the rezoning review process, claiming that it was a sham and that it had been economically deprived of using the site.
Both sides agreed to a settlement in December 2012, in which Summit/Greenfield agreed to suspend the lawsuits. The legal action will be dropped if the town board and planning board giving requisite approvals for a newer proposal: rezoning and development of part of the commercial section of the campus to allow for a large grocery store and ancillary retail. The newer proposal, which developer modeled after a similar plan from the town board, has been met with opposition from residents and some Chappaqua merchants, who worry that it could pose a competitive threat or create a third hamlet in town.
Meanwhile, the town board has relaxed commercial space zoning restrictions, lifting a cap on the number of tenants that would rent the office space.