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Digital Media Solutions (DMS), a digital advertising firm based in Clearwater, Florida, filed for Chapter 11 bankruptcy protection in a Texas court, as the company eyes a potential sale. Prepetition lenders are set to lead the bidding process with a $95 million stalking horse offer after a third-party offer fell through.

Digital Media Solutions Files for Chapter 11 : Financial Situation and Sale Process

In its bankruptcy filing with the Southern District of Texas, DMS reported around $358 million in secured debt. The company’s prepetition lenders are offering $95 million through a combination of credit bids and assumed liabilities. Additionally, they will provide a $122 million debtor-in-possession (DIP) loan facility, with $30 million in new financing and the rest allocated to rolling up prepetition debt.

CEO Joe Marinucci explained that the move followed a strategic review initiated by the DMS board in April 2024. Despite facing a downturn in post-pandemic advertiser spending, Marinucci expressed optimism about the company’s future under the guidance of "highly sophisticated investors."

Growth and Challenges

Founded in 2012, DMS uses proprietary consumer data and technology to offer tailored advertising services to over 1,800 clients, including major insurance companies, universities, and nonprofits. While the company saw rapid growth during the pandemic, it struggled with the fallout of discontinued acquisitions and legal challenges related to its now-defunct automated voice operations.

Digital Media Solutions filed for Chapter 11: Debt Structure

DMS carries secured debt across several loan tranches, originally administered by Truist Securities and Fifth Third Bank. These include:

• $214.7 million in a term loan,
• $70.4 million in a second term loan,
• $24.8 million in a bridge loan, and
• $48.1 million in a revolving facility.

The company’s ClickDeal subsidiaries are not part of the bankruptcy filing and continue to operate normally.

Legal Representation

Digital Media Solutions is represented by Porter Hedges LLP and Kirkland & Ellis LLP. The bankruptcy case is assigned to U.S. Bankruptcy Judge Alfredo R. Perez.