Kirch files for insolvency - Government official

The debt-laden German media group Kirch has filed for insolvency, a leading member of the ruling party said today.

Speculation had grown over the weekend that banks and investors were preparing a rescue package for the core of the country’s biggest private broadcaster.

‘‘The application (for insolvency) has apparently been filed,’’ said Wolfgang Clement, the deputy leader of Chancellor Gerhard Schroeder’s Social Democrats. ‘‘Now it is up to the bankruptcy administrator to decide’’ what happens to the company, which employs about 9,500 people.

He did not say which part of the Kirch empire was covered by the application. Kirch has debts of more than £3.9bn (€6.3bn) built up during an unsuccessful push into pay-TV and worsened by a slump in advertising.

Bank officials have said they are discussing with new investors a plan to restructure the profitable part of Munich-based Kirch - the film library and television stations held by its main KirchMedia unit - by providing more funds, discharging some of its debt and re-launching as a new company.

A rescue proposal that would have handed control of KirchMedia to investors including Australian media tycoon Rupert Murdoch and Italian Prime Minister Silvio Berlusconi in return for fresh capital broke down last week.