The Dolan Company, the Minneapolis, Minn.-based parent of the weekly Long Island Business News, intends to file for Chapter 11 bankruptcy because of debt from its former foreclosure processing services.
The company disclosed in a news release Thursday that it plans to reorganize under a prepackaged bankruptcy that would eliminate $120 million in debt. Dolan Co., whose shares trade over the counter, would go private and its existing shares would be canceled in the bankruptcy.
"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 Dolan's chief restructuring officer Kevin Nystrom.
The company made no mention of its business information division -- under which it owns Long Island Business News and over 60 small trade publications -- in its release. It said it would "continue honoring obligations of its employees, customers, and vendors in the ordinary course of business."
Dolan Co. and Long Island Business News, of Ronkonkoma, did not return requests for comment.
Long Island Business News, founded in 1953, was purchased by Dolan in 1998 from former owners Terry and Paul Townsend. Last September, the paper's longtime publisher, John Kominicki, left the publication.
As part of Dolan's bankruptcy, James P. Dolan, the company's founder and chief executive, and Scott Pollei, the chief operating officer, will resign.
Dolan Co. has no relation to Long Island's Dolan family, which owns a controlling interest in Cablevision Systems Corp., Newsday's parent.