The company, which was in bankruptcy in 2009, is planning to swap about $465 million of its debt into equity, The New York Times reported Monday.
In court papers, the company said it had about $1.1 billion in assets and close to $1.2 billion in debt. The Times said Reader's Digest had also managed to line up $110 million to keep the company running while in bankruptcy, which it expects to last about four months.
"After considering a wide range of alternatives, we believe this course of action will most effectively enable us to maintain our momentum in transforming the business and allow us to capitalize on the growing strength and presence of our outstanding brands and products," said Chief Executive Officer Robert Guth in a statement.
Reader's Digest downsized after its previous stint in bankruptcy, selling Allrecipes.com and Every Day With Rachel Ray, a home cooking franchise.
Among its obligations, the company listed the Federal Trade Commission, which it owes $8.8 million to cover a regulatory settlement, the Times said.