The publisher of Reader’s Digest in the US is planning to file for bankruptcy protection.

The Reader’s Digest Association (RDA) has indicated that the filing was for the US business only and internationally Australia/New Zealand, Canada, Latin America, Africa and Asia were adequately funded to continue ‘business as usual’.

Billing itself as the largest circulation magazine in the world, allegedly the move follows the US advertising downturn. Reader’s Digest advertising revenue fell 18.4% last year and was down a further 7.2% for the first half of this year.

The company currently owes USD$2.2 billion to numerous debtors. Additionally, Dow Jones reported the RDA missed a USD$27 million interest payment.

The company’s senior lenders will effectively take control of the RDA, converting a large part of its debt into equity, with the plan that the association will emerge from the process with its total debts reduced by 75%. Its international subsidiaries will not be involved in the process.

Should the plan progress chief shareholder, Ripplewood Holdings, would lose its entire USD$600 million investment in the company, which was acquired for USD$2.4 billion in 2006.

The process is contingent on the agreement of the company’s other lenders.