The third time is the charm for the Reader’s Digest Association, which looks like it is nearing court approval of a plan to emerge from bankruptcy after offering sweeteners to several classes of creditors.
The scheme is expected to knock off 75 percent of the company’s debt load.
US bankruptcy Judge Robert Drain, who twice rejected the company’s proposals, set a final hearing for Jan. 15.
Under terms, bondholders will be able to swap $600 million in unsecured notes for warrants that will give them 6.5 percent of the company stock, if in the future the company is valued at more than $1.8 billion.
Unsecured creditors will only get 3.6 cents on the dollar for a total of $4 million — more than the $3 million they were going to divvy up under a previous plan.
Ripplewood Holdings, which orchestrated the $2.2 billion buyout of the public company in 2007, has already written off its entire investment and will have no stake.
RDA filed for Chapter 11 on Aug. 24.