What Did the Bankruptcy of Penthouse Magazine Teach Us? In June 2018, Penthouse Magazine International, the company that publishes the Penthouse Magazine forum, sold for $11.2 million. At its peak, the corporation had a value of roughly $700 million (inflation-adjusted).

The most recent bankruptcy of Penthouse Magazine shows how far the publication has fallen and what may be learned about bankruptcy in general.

The Owner

WGCZ, which also owns XVideos.com and Bangbros.com, was the purchaser. While Bangbros owns more than 40 porn websites, XVideos serves as an aggregator (much as YouTube does for non-porn video content).

Two of the top 15 most visited websites in the world are among the properties of WGCZ. Although WGCZ’s winning proposal was higher than the $3 million stalking-horse price, it still constituted a nearly unimaginable fall from grace for the business that had propelled Bob Guccione to the Forbes 400 List by 1982.

The Auction

The Penthouse Magazine financial ruin auction, marketed with the aid of using DailyDAC, garnered the hobby of some of the bidders, along with Pornhub (owned with the aid of using MindGeek) and Hustler.

The excessive stage of hobby became no surprise, even though the low fee the belongings, in the end, garnered became—for the reason that they covered 2,000 emblems and copyrights, a 1,200+ movie library, and licensing agreements generating large income.

The Long & Winding Road

Penthouse Magazine became released in 1965 and had almost five million subscribers with the aid of using 1979. It got here to function with writers like Isaac Asimov, Alan Dershowitz, Stephen King, Philip Roth, and Gore Vidal. Its picture graph spreads covered iconic figures along with Madonna and Vanessa Williams. By 1986, Guccione’s General Media posted now no longer the simplest Penthouse Magazine forum but additionally 15 different magazines.

However, instances change. By 2002, Penthouse became right all the way down to 530,000 subscribers. General Media filed bankruptcy eleven the subsequent year. Penthouse’s belongings had been bought withinside the bankruptcy eleven cases to Globix Corporation founder Marc Bell and investor Daniel Staton. They shaped Penthouse Media to very own the business enterprise.

FriendFinder later bought Penthouse Media from Bell and Staton, however, that business enterprise in the end filed for bankruptcy eleven in 2013. Kelly Holland, thru her newly-shaped Penthouse Global Media, bought the Penthouse Magazine forum out of bankruptcy eleven in 2016. Her possession became pretty short-lived, with a 3rd bankruptcy eleven being filed in January 2018. Although hindsight is 20/20, Penthouse Magazine’s financial ruin became foreseeable.

Hamid Rafatjoo of Raines Feldman, suggest to the reputable committee of unsecured creditors, informed DailyDAC “[T]he quantity of the secured debt and credit score card quality hobby charge being charged on it became an anchor round Penthouse Global Media’s neck. In my opinion, it became in no way a query of if Penthouse could want to file, it became a query of when.”

Learned Lesson From The Penthouse Magazine

  • Failure of a business should not be seen as an inevitable “bad” outcome. In many sectors of the economy, creative destruction is still very much at work. Such mistakes simply serve to highlight “creative destruction,” which is the backbone of the American economy. In other words, traditional American capitalism, which is founded on efficient markets, encompasses both profitable and unprofitable businesses. As a result, dying businesses are a normal part of a vibrant, capitalist economy.
  • The possession of a senior secured position is frequently advantageous.
  • That so-called “sin investing” may be something to think about.
  • Axl Rose is a fascinating feline.

Interesting Tidbits From The Case

The $3 million stalking horse bid became made via way of means Dream Media, led via way of means Adam Levin. CEO of Oreva Capital, an LA-primarily based totally funding corporation that sold cannabis-fanatic mag High Times. At least 8 regulation companies went unpaid via way of means Penthouse Magazine forum.

These encompass Greenberg Traurig, which about $200,000; Bayard, P.A. (about $120,000); and Hogan Lovells (about $60,000).Axl Rose’s venture to Bob Guccione. Jr. issued withinside the lyrics of music on Guns ‘n’ Roses’ Use Your Illusion II’s album.

Became replied while Guccione Jr. despatched a letter to Axl Rose accepting his venture. Leaving it as much as the Rose to call the time and area. And ring which could be gotten into. Axl by no means answered. This is all in keeping with the Houston Press,

which additionally stated that the cause Axl by no means answered is “probable after locating out Guccione Jr. had 9 years of combat training.” DailyDAC researchers sought out proof of such training, however to no avail. The reader can be fascinated by this interview of Guccione Jr. wherein he explains why Axl did now no longer like him.