DENVER — Gillett Holdings Inc. agreed Tuesday to file for Chapter 11 bankruptcy reorganization, three months after creditors sought an involuntary filing.
The move will give the company time to restructure its $1-billion debt while continuing to operate Vail and Beaver Creek ski resorts, meatpacking and broadcasting businesses, said Gary Holmes, a spokesman for Denver-based Gillett.
In the 1980s, Gillett issued junk bonds with the help of Drexel, Burnham Lambert Inc. to buy television stations in Florida, California and Maryland. Since then, advertising revenue has fallen off sharply at the stations.
Gillett defaulted on $170 million in junk bonds in August when it missed $27.5 million in interest payments. It also owes $135 million on a bank loan. The company has been struggling for months to restructure its debt.
The reorganization plan, which Gillett expects to file shortly, will include plans to disburse $125 million from the sale of its WMAR television station in Baltimore. The proceeds are in escrow pending the restructuring.
George Gillett, chairman of the board of the company, will remain in control of all operations.
Fidelity Investments, Allstate Life Insurance Co. and Massachusetts Financial Services were among several creditors who filed a petition in U.S. Bankruptcy Court in February seeking to force Gillett Holdings into Chapter 11 reorganization.
In a statement, Gillett said that the Chapter 11 filing will be a vehicle for implementing a restructuring plan that has been developed during negotiations with creditors during the past four months.
Gillett Holdings is a privately owned holding company which owns Vail Associates Inc., Packerland Packing Co. of Green Bay, Wis., KSBW-TV in Salinas, Calif., and KSBY-TV in Santa Barbara.