Vice Media LLC filed for bankruptcy protection and struck a deal to sell itself to creditors, punctuating a precipitous fall for the media upstart that once boasted a US$5.7 billion valuation.

The developments cap a tumultuous few months for the firm, which began as an alternative magazine in Montreal nearly three decades ago and captured the attention of young viewers globally with documentary-style videos. It shared a Pulitzer Prize in 2020 and multiple Emmy wins for Vice News Tonight. 

Its rapid downfall underscores the challenges facing digital media companies, which are struggling as advertisers cut spending during an uncertain economy and route marketing toward tech platforms from Facebook and Google to TikTok.

The Brooklyn-based company listed both assets and liabilities in the range of more than $500 million to as much as $1 billion in a Chapter 11 petition filed in Southern District of New York. In a separate statement, Vice announced it reached a deal with creditors including Fortress Investment Group, Soros Fund Management and Monroe Capital to purchase its assets for $225 million and assume significant liabilities. The agreement, however, allows for rival bidders to emerge.

“We will have new ownership, a simplified capital structure and the ability to operate without the legacy liabilities that have been burdening our business,” said Bruce Dixon and Hozefa Lokhandwala, co-chief executive officers. “We look forward to completing the sale process in the next two to three months.”

Fortress Credit Corp. ranked among the biggest secured creditors, with claims totaling about $475 million, the filing on Monday showed. Vice secured commitments for debtor-in-possession financing from its creditors, including consent to use more than $20 million of cash to keep its operations going for now.

Vice secured a $450 million investment from private equity firm TPG in 2017, which valued the firm at $5.7 billion. The figure was startling for a media upstart, especially while so many of its industry peers struggled to generate profits. Other investors have included Walt Disney Co. and Fox Corp.

In the filing, Vice estimated it has more than 5,000 creditors and that it would have funds for distribution to unsecured creditors.

Its bankruptcy filing is a milestone for the digital media arena. In February, Vice said Nancy Dubuc was leaving the company after five years as chief executive officer, and then in late April Vice shuttered its flagship TV news show and laid off more than 100 staff.

Vice News Tonight started in 2016 as a newscast on HBO and won acclaim for its coverage of a white nationalist rally in Charlottesville, Virginia. HBO ended that partnership in 2019. Recently, the show aired on Vice TV, the company’s cable channel. 

This year, BuzzFeed Inc. shut down its news operation and online publisher Insider Inc. said it’s cutting about 10 per cent of staff.