Vertis, which is expected to generate approximately $1.1bn in revenues and nearly $60m in adjusted EBITDA in 2012, issued a statement last week announcing its plan to file for bankruptcy and sell its assets to Quad/Graphics via a court-supervised auction.

The bankruptcy filing is the third since 2008 for US-based direct marketing giant Vertis, which sold off its UK operations in 2005, and comes just two years after it dumped $700m of debt in its previous Chapter 11 filing.

According to court documents, Vertis' largest unsecured creditor is the Pension Benefit Guaranty Corporation, although the size of its claim has not been disclosed. The second-largest is Abitibi Bowater, which is owed $19.4m, while the combined total of Vertis' 30 largest creditors, excluding the Pension fund, is $62.4m.

In a case of bankruptcies making strange bedfellows, Eastman Kodak, currently under Chapter 11 bankruptcy protection itself, is also listed among the creditors and is owed $911,038 in trade debt, putting it ninth among Vertis' creditors.

Other significant creditors include Sun Chemical Corp ($18.6 million), Catalyst Paper ($5 million). Valassis Direct Mail, $2.76 million and OneMain Financial ($1.4 million).

Vertis pointed out that its $60m 2012 EBITDA was substantially down on 2011's $113.1m, which it said was due to price reductions, commodity inflation in the company's direct marketing and inserts business, and several customer losses, including one of Vertis largest customers, which had previously used Vertis for the vast majority of its advertising inserts before deciding to significantly diversify its supplier base.

The decline in Vertis' revenues had a significant impact on its liquidity as its ability to borrow funds under the secured credit facilities agreed as part of the Chapter 11 restructuring in 2010, was largely dependent on customer receivables.

As a result of its liquidity problem, the company had been in negotiations with its lenders for much of 2012 leading to the decision to pursue an "orderly sale of Vertis' assets" - a process that commenced in April and which concluded with Quad/Graphics submitting the highest offer to purchase substantially all of Vertis' assets.

As of 10 October, Vertis and Quad have entered a Stalking Horse Agreement whereby Vertis assets and associated liabilities, with specific exclusions outlined in the agreement, will be sold to Quad for $258.5m in the absence of any higher offers within a set timeframe.

Joel Quadracci, Chairman, president and chief executive of Quad/Graphics, said in a statement: "Quad/Graphics believes in the power of print in today’s multichannel media world and this acquisition further strengthens our ability to help retailers and direct marketers drive meaningful business results.

"The combination of Quad/Graphics and Vertis is a natural and strategic fit. The complementary capabilities of our two businesses in retail advertising inserts, direct marketing and in-store marketing will further strengthen and expand our offerings, and will allow us to even better serve our clients, achieve additional efficiencies and build long-term value for our shareholders. We look forward to welcoming Vertis’ clients and employees into our family."

Gerald Sokol, chief executive of Vertis, added: "The offer from Quad/Graphics was the most compelling proposal we received because it ensures continuity for clients and the greatest number of opportunities for our employees while also maximizing value for our stakeholders.

"By combining the talents and resources of these two great companies, we will be able to enhance the levels of service, quality and technological innovation we provide to our clients, further improving the effectiveness of our programs and increasing clients’ returns on their marketing investments. We are excited by the opportunities ahead and thank our lenders for their continued support in securing a smooth transition for our businesses."