The newspaper industry's financial declines are once again proving to be Big Law's gain, with Skadden, Arps, Slate, Meagher & Flom becoming the latest firm to advise a publisher saddled with overwhelming debt.

McClatchy, the publisher of the Miami Herald, The Kansas City Star and more than two dozen other newspapers around the country, filed Chapter 11 paperwork Thursday in federal bankruptcy court in the Southern District of New York. The Sacramento-based company estimated owing between $500 million and $1 billion in debt to more than 100,000 creditors.

A Skadden team led by Shana Elberg and Van Durrer II is acting as debtor's counsel, with Groom Law Group and Togut, Segal & Segal also acting as legal advisers to McClatchy, the country's second-largest newspaper publisher. The filing comes as the print news industry has faced significant challenges in recent years, including declining advertising revenue and subscriptions amid the rise of digital outlets.

The same challenges have created plenty of work for law firm bankruptcy, M&A and litigation practices. The Tribune Company, which owned the Chicago Tribune and the Los Angeles Times, among others, went through a four-year restructuring process that generated more than $100 million in fees for Sidley Austin, its debtors counsel. Other big firms, including Davis Wright Tremaine, Jenner & Block, Jones Day, Paul Hastings, Reed Smith and Seyfarth Shaw also generated millions of dollars in fees in the case.

And in 2019, the merger of two other publishing companies, GateHouse and Gannett, brought more work to Skadden as well as Nixon Peabody (which represented Gannett with Skadden) and Cravath, Swaine & Moore (representing GateHouse's parent company New Media Investment Group). The deal, valued at a relatively small $1.4 billion, created the largest publishing company in the country—and served as a reminder that the once-lucrative newspaper industry is much less valuable than it once was.

Skadden also played a role in Gannett's 2015 acquisition of Milwaukee-based Journal Media Group Inc. and advised the company in a potential merger with Tribune, represented by Kirkland & Ellis, in 2016.

McClatchy outlined a restructuring plan in which it would transfer ownership of the 160-year-old, family-owned company to hedge fund Chatham Asset Management (represented by Paul, Weiss, Rifkind, Wharton & Garrison), its largest shareholder. In a press release, the company said it obtained $50 million debtor-in-possession financing from Encina Business Credit, represented by Choate, Hall & Stewart, which will allow its newspapers to continue operating through the restructuring process.

While McClatchy is currently a public company, it said it expects to emerge from bankruptcy with private ownership.

There are no law firms listed among McClatchy's 30 largest unsecured creditors—the two largest by far are the Pension Benefit Guaranty Corp. (owed $530.3 million) and Bank of New York Mellon ($14.9 million). Emmet, Marvin & Martin is representing BNY.