Dragged down by cratering yellow-pages sales and dwindling local online ad revenues, Idearc Media has filed for Chapter 11 bankruptcy protection. The plan is to get out from under $9 billion worth of total debt, and the company said it has reached a deal with creditors to slash that to about $3 billion in secured bank debt. 

Idearc expects to emerge with a cash balance of roughly $150 million post-reorg, and that the remainder of its bank debt and bonds will be converted to equity. “Essentially we have a company with good potential being held back by a terminally ill balance sheet,” CEO Scott W. Klein said, in the official release.

Formerly a division of Verizon, Idearc went public in 2006. It made a number of investments to bolster its local online advertising footprint since then, including a $3.3 million investment into hyper-local community site AmericanTowns.com, and buying out rival InfoSpace’s online directory business for $225 million. It also offers free and subscription-based business listings, display, video and paid search ads across Superpages.com.

Photo Credit: How can I recycle this

• InfoSpace Sells Online Directory Business To Idearc For $225 Million
• Idearc Media Invests $3.3 Million In AmericanTowns.com; Acquires LocalSearch.com URL