Houghton Mifflin Harcourt emerges from bankruptcy

By D.C. Denison, Globe Staff

Boston-based publisher Houghton Mifflin Harcourt emerged from bankruptcy protection Friday, as a judge in New York approved a deal with the company’s creditors to eliminate $3.1 billion in debt.

Under the terms of the Chapter 11 restructuring, Houghton’s creditors have exchanged their debt holdings for ownership stakes in the company.

The company filed for Chapter 11 bankruptcy protection on May 21, with the support of more than 70 percent of its creditors, who agreed to exchange their debt for equity. At the time, the company said it expected that it would emerge from the process by the end of June.

The company was created by the combination of Harcourt Education and Houghton Mifflin, which several years ago, were each bought separately by Barry O’Callaghan, a former Irish investment banker, for a total of $7.4 billion. O’Callaghan borrowed heavily to finance the purchases, which left the combined company with substantial debt that it struggled to pay off.

O’Callaghan acquired Houghton from Boston buyout firms Thomas H. Lee Partners and Bain Capital, and a minority partner, Blackstone Group. That sale was the third time in five years that Houghton had a new owner. O’Callaghan is no longer affiliated with the company.

The company is one of the largest educational publishers in the world. Its origins date to 1832 in Boston, and among its best-known titles are the “Curious George” books and J.R.R. Tolkien’s “Lord of the Rings.”

In a release, Houghton chief executive Linda K. Zecher said, “We have achieved our financial restructuring objectives and moved through this process quickly and successfully. Now we have emerged with significantly less debt, a much improved balance sheet and capital structure, and the financial strength to invest in new products and innovative digital education solutions to grow our business for the benefit of our customers.”