After a 29-year run, Vice files for bankruptcy

Vice was valued at $5.7 billion just six years ago, eyeing a potential IPO. Now, the trendsetting media company has filed for Chapter 11 bankruptcy.

The company’s lenders — Fortress Investment Group, Soros Fund Management and Monroe Capital — have agreed to purchase the company for $225 million. That’s only about 4% of the company’s 2017 valuation. Vice also has the right to sell to a higher bidder.

“This accelerated court-supervised sale process will strengthen the company and position VICE for long-term growth,” said Bruce Dixon and Hozefa Lokhandwala, VICE’s co-CEOs, in a press release. “We will have new ownership, a simplified capital structure and the ability to operate without the legacy liabilities that have been burdening our business.”

This unfortunate turn of events for Vice has only darkened the storm cloud over the digital media industry. In the last month alone, the Pulitzer Prize-winning BuzzFeed News was shuttered as part of layoffs that impacted 15% of the company. MTV News was also just shut down as part of cuts that impacted 25% of workers at its parent company, Paramount. As for Vice itself, the company recently cancelled its TV program, “Vice News Tonight,” as well as verticals like Vice World News, Vice Audio and Waypoint.

Vice’s financial issues are not a pure reflection of the media business at large, though. A combination of bad management choices in the “pivot-to-video” era, as well as the company’s overall “boy’s club” work environment, created a perfect storm for the Vice’s decline. The company made severe managerial missteps and allegedly fostered a culture of sexual harassment. When these allegations were made public, founder and CEO Shane Smith stepped down, though he claimed to not know that president Andrew Creighton reportedly paid off an employee to settle a sexual harassment claim; Smith’s successor, Nancy Dubuc, stepped down abruptly this February amid the company’s financial turmoil. Meanwhile, Vice co-founder Gavin McInnes, who left the company in 2008, went on to start the Proud Boys, a far-right group.

According to Vice’s financial reporting, the company has about $834 million in debt. During the sale process — which the company believes will take a few months — Vice will have access to more than $20 million in financing from its lenders to continue operations.