Reader's Digest seeks sale of CompassLearning

NEW YORK (Reuters) - Bankrupt publisher Reader's Digest RPPLER.UL is seeking to sell its CompassLearning educational technology business to Marlin Equity for about $20 million, according to court documents filed on Friday.

Reader's Digest signed an agreement with Marlin Equity in which the private equity firm's offer would set the bidding floor for a proposed bankruptcy court auction to take place on January 7, according to court documents.

Other bids could come in during the proposed auction of the unit that could push Marlin Equity out as the buyer. Marlin's bid is for $43 million including debt.

A hearing on the sale procedures is due to take place on December 18. The judge will rule on the company's proposed timeline, which would include a sale hearing on January 11 in which the judge could approve the unit's sale.

Reader's Digest said financial advisory firm Miller Buckfire & Co launched a sales process for the unit in late August and received interest from 122 possible buyers including both corporations and financial firms.

Reader's Digest filed a prearranged bankruptcy in August through which it plans to cut its debt and transfer ownership of the 87-year old U.S. magazine and other businesses to a group of lenders.

CompassLearning was founded in 1969 and is headquartered in Austin, Texas and has about 300 employees. It makes the Odyssey software-based curriculum.

Marlin Equity, based in El Segundo, California, was not immediately available for comment.

The case is in Re Reader's Digest Association Inc, U.S. Bankruptcy Court, Southern District of New York, No. 09-23259

(Reporting by Caroline Humer; Editing by Steve Orlofsky, Phil Berlowitz)