Reader's Digest Files Chapter 11

A nationally recognized publication known for having inspirational stories and being small enough to fit in one's pocket is reportedly planning to file for Chapter 11 bankruptcy protection.

Reader's Digest Association is considering filing for protection in an effort to reduce its debt by 75 percent, Bloomberg News reports.

The publisher says some of the debt came from a pre-arranged agreement with the investor group led by Ripplewood Holdings. That company bought Reader's Digest in March 2007 and reportedly saddled it with debt prior to the advertising market slump.

"Because this is a pre-arranged deal, it'll be business as usual," said Mary Berner, CEO of the Digest. "There's no anticipated layoffs, no anticipated business closings, no anticipated effect on our employees, our freelancers, our vendors or our business partners."

According to the New York Times, the publisher did not make a $27 million interest payment on its notes that was due this past Monday and will reportedly use a 30-day grace period to talk to lenders about the prearranged bankruptcy filing.

In January, the Digest announced plans to cut 8 percent of its 3,500 jobs, require U.S. workers to take five days of unpaid leave and suspend matching contributions to 401K retirement plans.