Last week, Affiliated Media, Inc., the holding company of Media News Group, and the parent corporation of the Alameda Journal and Alameda Times-Star, filed for a "prepackaged" chapter 11 bankruptcy. If approved, the bankruptcy will allow the company to absolve itself of much of its debt.

Media News Group is the second largest newspaper owner in the United States. It prints newspapers in 12 states, with its largest collection in California. In addition to its ownership of the Journal and Times-Star, it owns the Oakland Tribune, the San Jose Mercury News, among nearly 154 papers nationwide.

In a Jan. 15 press release from the Media News Group, the company claims to be in about $930 million in debt. It cited declining circulation and advertising revenues in the newspaper business as a reason for it filing for bankruptcy. However, the company made clear that it is current on vendor payments and that it has enough money to pay for its operations.

Unlike many bankruptcies, a "prepackaged plan" means that the company has already gotten the approval from its lenders for its financial restructuring. Because of its disclosure, the company expects to breeze through bankruptcy court.

Under Affiliated Media, Inc's restructuring plan, the company intends to cut its debt to about 165 million. Its senior lenders will receive stock shares equivalent to how much they're owed, meaning the lenders will now have an 89 percent stake in the company. CEO William Dean Singleton and President Joseph J Lodovic IV will own the remaining 11 percent, with an option to increase their shares to 20 percent. They will also remain in charge of the company.

The press releases made it clear that the restructuring will only affect the holding company, not any of its newspapers. "It does not affect the operation of any of our vendors or other operations. It gives us one of the strongest balance sheets in the industry. It gives us breathing space to create a new model for the newspapers we publish," Singleton said.

He also said that all of Affiliated Media, Inc's papers, except one, is profitable.