Filing for Chapter 11 reorganization can help APB identify potential investors and can protect it from creditors, according to company spokesman Joe Krakoviak.
"This (move) will help us," Krakoviak said. "If you go into bankruptcy, you have a process set up to identify potential investors and maximize the return to creditors and investors. This eliminates the uncertainty of investing in a company with substantial debt against it."
The New York-based company said it will continue to search for new investors; it is talking with most major media companies.
Last month, APB, which operates crime news site APBnews.com, ran out of money and laid off its entire staff of 140 employees. To date, the company said it has incurred about $7 million in debt.
Several Internet content companies, including Salon.com and Oprah Winfrey-backed Oxygen Media, have recently laid off workers and taken other cost-cutting measures to remain in business. While dozens of publishing start-ups have launched free Web sites in hopes of drawing large audiences and big advertising dollars, many have found it hard to stand out in the crowded field.
In March, APB closed $3.6 million in the first step of its third round of financing, but a drastic decline in market valuation for dot-com businesses halted the process.
Since the layoffs, APB has rehired close to two dozen employees in the editorial, finance and computer departments. The company continues to develop new content daily; it still plans to expand its business and break even in the next two years.
"We are still projecting to reach a break-even point in the first quarter of 2002--but at a much slower investment rate," Krakoviak said.
When founded in 1998, APBnews had more than 55 veteran newspaper and TV journalists, including two Pulitzer Prize winners, as well as 130 freelancers.
APBnews has fought for freedom of the Net press, recently winning a lawsuit that gave it the right to publish online the financial disclosure records of all federal judges.
"(Filing for bankruptcy) isn't the road we'd like to be on, but it's the best road to be on right now," Krakoviak said. "If we did not think there was a good chance of bringing new investment, we would not have filed Chapter 11. This provides the reorganization of the company's finances and return to financial health."