Ziff Davis Media files for bankcruptcy due to overwhelming debt

In a rather shocking development, Ziff Davis Media appeared before the court  today and filed for bankruptcy due to overwhelming debt that could reach up to US$ 1 billion. The company is responsible for entities EGM and 1UP.com among others. Know the full details after the jump!

Publishing house Ziff Davis Media recently sent out a press release, stating that it has filed for Chapter 11 Bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York.

The reason cited was the debt now mounting between US$ 500 million and US$ 1 billion. This will definitely affect all its video game-related businesses like publications EGM, Games for Windows, and PC Magazine, not to mention the website 1UP.com.

If approved by the court, Ziff Davis will have to undergo an intensive restructuring of its finances. An ad hoc noteholder group is planning to pay up to US$ 24.5 million to keep the company alive during this dangerous times.

Despite all these, Chief Executive Officer Jason Young remains positive that they will be able to overcome the situation at hand. He explained:

This agreement underscores our Senior Secured Noteholders’ confidence in our ability to position ourselves for continued profitable growth.Operationally, we are also making great progress.

As a result of our employees’ hard work, we ended 2007 on a strong note. We matched audience growth with impressive digital revenue expansion. And while the print market continued to be challenging, we continue to be print category leaders in the markets we serve.

If the restructuring process pushes through, vendors and business partners should expect to be paid for post-filing goods sold and services rendered to the company in the ordinary course of business.

Lastly, Ziff Davis Media has also filed a motion to the court that it should be allowed to continuously pay employee wages and salaries and to provide employee benefits without interruption.