Kirch Media has today filed a bankruptcy order with the German courts following months of financial malaise and increasing pressure from banks and investors (see Kirch Sell Off Begins).
Last ditch attempts to rescue the company including talks with minority shareholders Rupert Murdoch and Silvio Berlusconi, from insolvency have failed. Kirch Gruppe’s debts are thought to be in the region of $5.7 billion, built up during an expensive push into the pay TV market and exacerbated by the advertising slump.
Indications suggest that the group’s remaining assets – including a 40% stake in Axel Springer Verlag AG, publisher of Germany’s biggest newspaper Bild – will be ‘restructured’ by a new company comprising Kirch Gruppe’s bankers including Commerzbank and DZ Bank and a court-appointed bankruptcy administrator.
There are concerns in Germany that politicians and banks will be drawn into the proceedings. Questions are being asked about the German government’s backing of Kirch and loans granted by Bayerische Landesbank, which is 50% owned by the state of Bavaria.
