Education-software provider Anthology Inc. is reportedly preparing for a potential Chapter 11 bankruptcy filing, a move designed to facilitate a comprehensive restructuring of its substantial debt, which exceeds $1 billion. This development, according to individuals familiar with the matter, highlights the ongoing financial pressures faced by the company.

The proposed restructuring plan centers on a debt-for-equity swap, wherein an ad hoc group of secured lenders would assume control of a reorganized Anthology. Nexus Capital Management, a Los Angeles-based private equity firm, is leading this group. Nexus has been strategically accumulating Anthology's debt in recent months and has emerged as one of the company's most significant lenders, playing a pivotal role in the envisioned turnaround.

A crucial element of the workout strategy involves the divestiture of certain Anthology assets. This move is expected to help streamline operations and further reduce the company's financial obligations. While discussions are actively progressing, sources cautioned that the plans are still in development and remain subject to alteration.

Responding to inquiries, a representative for Anthology issued an emailed statement, asserting that the company "has made great progress over the past two years in improving our business and product capabilities and competitiveness." The statement also emphasized that "any path forward will enable us to continue providing highly innovative solutions to our customers," conveying a message of continued service and innovation during the restructuring period.

Anthology's financial difficulties have been a subject of scrutiny for some time. Previously, it was reported that the Veritas Capital-backed company had been exploring a potential sale as part of its efforts to negotiate a deal with lenders regarding its considerable debt. Further illustrating the company's challenged financial standing, Moody’s Ratings downgraded Anthology's credit rating to Ca from Caa3 in April. This downgrade was prompted by a reported decline in new bookings and a higher-than-anticipated rate of customer attrition, even as the company implemented cost-cutting measures to mitigate these pressures. Anthology Inc. itself was established through a merger with Blackboard Inc. in 2021. Representatives for Anthology’s financial adviser PJT Partners Inc. and Nexus Capital Management declined to comment, and inquiries to Veritas were not immediately answered.