10 December 2010 12:05 PM, PST | The Hollywood Reporter | See recent The Hollywood Reporter news »

Financially strapped Rhi Entertainment, a leading producer and distributor of TV movies and miniseries, said Friday it has started voluntary Chapter 11 bankruptcy proceedings that will wipe away $309 million in debt.

Under the plan, creditors will take an 85% ownership stake in the company, with the remaining 15% maintained by president and CEO Robert Halmi Jr., whose father founded the company in 1979.

Hallmark Cards purchased Rhi in 1994, and Halmi Jr., along with other top executives and affiliates of investment firm Kelso & Co., acquired the company in 2006, saddling it with $609 million in debt. It proved an unmanageable amount when worldwide ad rates plunged 22% in 2008, Halmi Jr. said Friday.

After the bankruptcy, the company's debt will stand at $300 million. Kelso and public shareholders will have lost as much as $280 million as the stock, which traded for $13 a share two years ago, was at a nickel on Friday. Halmi Jr.'s personal wealth has taken a $6.5 million hit. »

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