Bloomberg News is reporting that the Reader's Digest Association has hired "hired law firm Kirkland & Ellis LLP to explore restructuring options including a possible bankruptcy filing."

The law firm was asked to evaluate options for the Pleasantville, New York-based publisher that include a possible “pre-packaged” or “pre-arranged bankruptcy,” in which much of the restructuring work is completed out of court, the person said. A pre-packaged bankruptcy is more advanced than a pre- arranged bankruptcy as it already has agreements from creditors about the outcome of a reorganization.

According to a Feb. 18 credit opinion by Moody`s, Reader`s Digest`s “capital structure appears unsustainable and may violate its covenants or restructure within the next year to 18 months.” Cash-flow and debt are also issues, the ratings firm said.

In January, Reader’s Digest Association announced that 8% of its global workforce—about 280 people—would be let go, that it would impose mandatory unpaid vacation days for remaining employees and that contributions to the 401k pension plan would be suspended.

The company has offices in 45 countries around the world, including Canada, and publishes 92 magazines. Last year, Reader’s Digest launched two new Canadian magazines: Best Health and More of Our Canada.