Recently, Penthouse filed for bankruptcy. Or more accurately the current publisher FriendFinderNetworks Inc., also responsible for several fee based and adult dating sites, made the hard choice to seek refuge from debt through a bankruptcy proceeding.
In a ruling by a Delaware judge on 10/15/2013, the plan that was negotiated by FriendFinder and its stakeholders was approved. In that deal roughly $300 million in debt will be eliminated, and the companys annual interest expense will be reduced by about $50 million.
FriendFinder Network has already made statements that they will continue with business as usual and anticipate that users wont experience any changes, and their affiliates will still get paid.
Even though some stakeholders may get nothing as a result!
Now you may be asking, How does this relate to me as an individual? And that is a fair question.
The answer is, if a company whose claim to fame is encouraging casual sex and being known in the magazine world as the smutty version of Playboy can get out of debt and get back on track, so can you!
These guys are the perfect example of an entity that needed help to get out of the vicious cycle that debt can be. They have not turned a profit since 2008, but have continued to spend to keep the doors open and the lights on which has lead them further into debt over the years.
For many of you reading this you know the cycle very well. Some of you may even be suffering at this point from the stress and worry that comes with such a dire monetary situation.
While declaring bankruptcy is not a cure all, or the best solution for everybody, it can put a stop to some of the worst aspects of the downward debt spiral.
So what were these steps that Penthouse took? First one is Take a Look!
To begin with they probably took a hard look at their finances and the prospects for future money. I jest a bit here because big corporations like this one have regular financial meetings and know where they stand monetarily.
For you folks at home that is not always the case. It can sometimes be very daunting to peer into your pocketbook and get an idea of how bad (or not) the situation really is. But it is a very important first step. Putting to paper the actual facts of your finances will paint the picture of what you make vs. what you spend.
Next Weigh Your Options
The next step is to determine if the option of bankruptcy is right for you. The adult site guys tried a few things to bring in more money first although to no avail. After which they went for bankruptcy as the best option to shore up further losses and keep the company running.
This is where outside resources can come in handy. Unless you are an expert on the subject or you know someone who is you may want to speak with someone in the know, like a bankruptcy attorney. Bankruptcy attorneys deal with these situations every day. They know how the system works. Not to mention having an advocate, someone to fight on your behalf, can actually relieve some of the stress and bring some peace of mind.
Develop an action plan to get out of debt.
As mentioned our friends at Friends put a plan in motion that will keep pay going to their affiliates and likely wont cause service disruptions to users while eliminating some debt. Whatever the case may be for your situation the worst thing you can do is NOTHING! As we talked about earlier, this is a spiral that continues to turn on itself. If you are already struggling to pay your bills and have borrowed money with an interest rate you will continue to go further into the red if you do not take action.
If bankruptcy is the right choice for you the internet is filled with good information to research on the subject. Especially if you decide to go it alone. Do your homework!
If you are choosing to delay bankruptcy at this time perhaps reworking (or finally implementing) a plan to reduce your debt would be a good move. As would cutting up your credit cards or cancelling accounts that you dont need and doing some coupon clipping for a while. There is also a plethora of information out there on how to shop and spend money wisely that will help you to create some new money habits.
Whatever you decide to do, go easy on yourself! Remember, even in the behemoth that is the sex industry money can be a challenge. Seek a solution today and you will be on your way to restoration. Just like Penthouse!
About The Author:
Christopher Migliaccio is a bankruptcy attorney in North Texas with the law firm Warren &Migliaccio, L.L.P. A graduate of Thomas M. Cooley School of Law in Lansing, MI, Chriss undergraduate studies in accounting fortify his expertise in the intricacies of federal bankruptcy rules and the bankruptcy process. When he isnt busy crafting effective strategies for clients, Chris enjoys spending time with his wife, three children, and their Golden Retriever and chocolate Lab.
Photo Credits: http://www.flickr.com/photos/poolie/2617276183/