Sweepstakes Operator Bankrupt
Oct. 29, 1999
NEWARK, N.J. (AP) _ American Family Enterprises, which runs a sweepstakes plugged by Dick Clark and Ed McMahon, filed for bankruptcy protection Friday to help it settle dozens of lawsuits alleging deceptive advertising over its sweepstakes.
American Family also announced that it had reached an agreement in principle that it expects will settle several dozen class-action lawsuits that have been consolidated in federal court here.
``We're hoping in the next week we'll be able to announce a settlement,'' said a company spokesman, Rich Tauberman.
American Family said the bankruptcy would not disrupt agreements, entered over the last year, with 40 states and the District of Columbia, that resolved allegations of deceptive advertising regarding its sweepstakes.
The Jersey City company said the Chapter 11 reorganization would not affect its sweepstakes or magazine subscription operations.
``No prize winners have been affected. People can still buy magazines. There is no impact for consumers,'' Tauberman said.
The privately held company said it filed for bankruptcy ``to resolve its pending litigation, strategically restructure its finances and operations, and to enable it to compete successfully over the long term.''
Figures on assets and liabilities, and its largest creditors, were not available, Tauberman said.