VICE Media LLC Files for Chapter 11 Bankruptcy

VICE Media LLC filed for Chapter 11 bankruptcy Monday, a process that is likely to result in the sale of the company. The news comes a few weeks after the company shuttered VICE World News and canceled VICE News Tonight, its flagship news television program, resulting in more than 100 layoffs across the newsroom. The company will continue to operate normally during the Chapter 11 process.

The New York Times reported that VICE has a bid from Fortress Investment Group, its largest debt holder and Soros Fund Management, for $225 million. Chapter 11 filing documents viewed by Motherboard show that VICE Media LLC and 31 associated LLCs owe Fortress $474.6 million. 

The filing is the latest in a series of blows to the company, which once took funding at a $5.7 billion valuation. The Wall Street Journal reported last week that it is now most likely to be sold through bankruptcy to Fortress Investment Group, a private equity firm that is VICE’s largest debt holder. As a senior debt holder, Fortress is set to be paid out before any of the company’s other creditors. In 2019, the company raised $250 million in debt from investors including Fortress and George Soros’s Soros Fund Management.

The Chapter 11 filing states that VICE’s management “has determined that it is advisable and in the best interest of the Vice Group Companies to enter into a stalking horse agreement for the sale of substantially all assets and related auction procedures.” A “stalking horse” agreement is when a potential buyer is in place in advance of a bankruptcy filing.

“We look forward to completing the sale process in the next two to three months and charting a healthy and successful next chapter at Vice,” Hozefa Lokhandwala and Bruce Dixon, VICE’s CEOs, told the New York Times in a statement. VICE did not immediately respond to Motherboard’s request for comment.

VICE has taken on a series of high-profile investments at large valuations over the years. These investments allowed the company to expand, but ultimately created a list of companies expecting a return on their investment. This included private equity firm TPG, which gave the company $450 million in 2017 to expand its VICE TV offerings and expand internationally. The company has also taken high-profile investments from A&E Networks, Disney, and Fox. 

The Chapter 11 documents show that VICE owes money to a variety of creditors. It owes $20 million to the founders of Pulse Films, which it has worked with for years and acquired in 2022. It owes nearly $10 million to an IT consulting firm called WiPro, $3.8 million to CNN for third party production services, and at least $6 million to Antenna, a Greek corporation that provided funding for VICE World News. It owes money to companies that provide enterprise software services to the company, including Workday, Adobe, Ranker, Getty Images, Amazon Web Services, Piano Software, Salesforce, Wolftech, Asana, and Oracle. It also owes $539,732 to ConEdison for utilities.

VICE Media was founded in 1994 and grew from a small magazine based in Montreal to a complex, international youth media conglomerate with a flagship television channel, multiple film studios businesses, a variety of digital media brands (including Motherboard), a news division with shows on HBO and Showtime, an advertising and creative agency, and, most recently, an international news division called VICE World News. Last month, roughly a week after Buzzfeed News shut down, the company announced it would end the VICE World News brand.

“We are transforming VICE News to better withstand market realities and more closely align with how and where we see our audiences engaging with our content most,” co-CEOs Dixon and Lokhandwala said in a note to staff after those cuts that was reported by The Wall Street Journal. The bankruptcy filing comes two weeks after those cuts.

In a filing with the court, VICE said: “From their humble beginnings as a niche magazine, the Debtors and their non-Debtor affiliates (collectively, “VICE”) have grown into a global media company that focuses on content centered around news and culture, serving a largely global youth audience. Today, VICE is a global, multiplatform media company that has a powerful brand, diversified financial profile, premium content, and rich engagement with its youth-targeted audience.” 

Jared Ellias, a professor at Harvard Law School and corporate bankruptcy expert, said that, based on publicly available reporting, VICE Media’s bankruptcy process is likely to be relatively quick because it appears to already have someone willing to buy it.

“Generally how these things tend to go is the company is going to file for bankruptcy and it will immediately seek court permission to hold an auction,” Ellias said. “And the buyer that’s out there will be what we call a stalking-horse bidder, which means that the company has agreed to sell itself to the buyer.” Ellias added that there must still be an auction process, and that during the auction process, a variety of things could happen. 

“My guess is there will be an auction probably within a couple weeks of the filing. Perhaps another bidder emerges, but at the end of the auction, VICE will have a new owner, and the sale will be effectuated pretty quickly,” he added. “I’d be surprised if the whole thing lasted longer than two months.”

Previous reporting has suggested at various times that VICE Media could be sold in parts; the company has for years promoted the fact that it has a diversified business which includes VICE, VICE News, VICE TV, VICE Studios, Pulse Films, the fashion magazine i-D, and Virtue, an advertising and creative agency. VICE also owns the media brand Refinery29, which the company purchased in 2019 for a reported $400 million in a deal that was mostly stock. 

VICE Media’s board, and perhaps the courts, will ultimately decide which offer to accept: “The debtor owes a fiduciary duty to maximize the value of the firm for the benefit of all creditors. The debtor is, I would guess, highly likely to allow people to bid for the whole thing and then also for bits and pieces,” he said. “But if the debtor’s business judgment is that this thing should be sold all together, it will be very hard to imagine a group of discrete purchasers picking apart different pieces of it.”

At its height, the company operated 35 offices worldwide. It has shuttered some of these over the last several years as the company has sought profitability in part through cost cutting and layoffs. 

VICE says in the filing that it has assets between $500 million and $1 billion.

According to the bankruptcy documents, the restructuring will be managed by Frank Pometti and Mark Del Priore of the consulting firm AlixPartners. Last month, Del Priore was appointed as interim CFO of the company. 

Earlier this year, former CEO Nancy Dubuc left the company after a five-year run succeeding co-founder Shane Smith. In January, she told the New York Times, “When I walked in here, it was unclear whether the company could survive.” In her departing email, which was previously published by Semafor, she wrote “I am proud to leave a Vice better than the one I joined … today Vice has an incredible opportunity in the hands of a new management team who are looking to harness the businesses we built and grew and to lay the groundwork for the future.”

Disclosure: This story was reported and written, using publicly accessible filings and news reports, by Motherboard editor-in-chief Jason Koebler. It was edited by Motherboard executive editor Emanuel Maiberg. No VMG corporate or news executive reviewed this story before it was published.