Jason Young, CEO of Ziff Davis Holdings Inc., on Thursday, March 6, defended a debt-for-equity swap agreement the magazine publisher arranged with bondholders in an in-depth Q&A with Tech Confidential.

Ziff, a New York publisher of technology titles such as PC Monthly, PC Magazine and Electronic Game Monthly owned by private equity firms Willis Stein & Partners LP and DLJ Merchant Banking Partners, filed for Chapter 11 bankruptcy protection on Wednesday. The company plans to restructure its business through a prenegotiated reorganization plan.

Under that plan, the buyout firms would lose control of Ziff, with the company exchanging $225 million due on senior secured notes for 88.8% of new common stock in the reorganized company, along with a new senior secured note with face value of $55 million. A special committee of noteholders that represents about 80% of the $225 million in notes outstanding Ziff bonds has pledged to support the Chapter 11 plan. The noteholders have also agreed to let Ziff use $24.5 million in cash collateral, securing the notes to fund its operations.

Yet whether Young, 38, is the right person to lead the company through what could be a contentious bankruptcy process remains to be seen. The executive has spent most of his professional career with the company, joining Ziff in 1990 as an intern. He rose to become president of Ziff in 2004 and was named CEO in August of last year.

Here is the extended version of my conversation with Young. (Disclosure: I was an editor at PC Magazine from 1988 until 1993.) -- Mary Kathleen Flynn

Tech Confidential: Why did Ziff decide to declare bankruptcy rather than seeking an out-of-court settlement with creditors?

Jason Young: The capital structure and debt load were created when it was a very different business and a very different time. We announced in August that we would finally correct that. Since then, we have been engaged with different classes of debtholders to put into place a capital structure that would appropriately support the business.

We announced two things yesterday. One, we have reached agreement with senior lenders to delever the debt down to $57 million and get a cash infusion of up to $25 million. Two, the junior class of lenders is not on board with this deal. It's not a disagreement over the notion of delevering or over the concept of cash being provided. It's a disagreement over who gets what piece of equity on the other side.

Our bondholders will exchange debt for equity, and we tried to figure out who gets what percent of that going forward consensually. But the junior debtholders, who will own 11% under this plan, believe that number should be higher. We filed the Chapter 11 plan of reorganization so the court can settle the last question in a timely and efficient manner.

These are the important final steps in correcting a longstanding problematic capital structure that was created when the company was formed in 2000. The capital structure was appropriate at the time. But in 2000, tech magazines sold 160,000 ad pages; in 2007, they sold 30,000. Seventy-five percent of that market evaporated.

During that time, we didn't stand still. We have completely transformed the business, leveraging powerful legacy brands and building a new digital platform from scratch. Entering 2008, the majority of revenue is anticipated to flow through digital products. We have done that faster and more efficiently than most in the market. In the fourth quarter of last year, the audience across our digital properties grew in excess of 30%, and digital revenue grew by 25%. In January, comScore reported that our digital network grew 28% year-over-year. On Monday of this week, PC Magazine's Web site had the single largest day in its history by an enormous magnitude, thanks to a story of ours on "The Best Free Software" being featured on the Yahoo! home page. We had just under 1 million unique visitors.

That may be so, but wouldn't Ziff have benefited by moving earlier to overhaul its capital structure?

In the past the expectation was that as the digital business grew, there would be an opportunity to grow back into the capital structure that was put in place. But even though digital growth happened at, and even above the pace we expected, the print business just kept on declining. By summer, when I became involved as CEO, it became clear to the board and myself that we weren't going to grow back into that capital structure any time soon. It was time to correct the capital structure.

What's the thinking behind the funding component to your plan, and might Ziff eventually decide to liquidate some assets?

The costs involved in the restructuring and bankruptcy process are incremental. We have a profitable business from the operations standpoint. But actually executing through to the other side does require incremental funding.

We were involved in a sales process in 2007, and it resulted in the sale of our B2B division. The offers put out for the other two divisions were not reflective of their value. At the conclusion, we went into the restructuring process and ceased to be engaged in a sales process.

We are decidedly not in a sales process. We think it's an important reflection of the operation that the debtholders very clearly embrace the opportunity to exchange their debt position for go-forward equity. The dispute here is only over who gets which piece of it. They are fighting over who gets the biggest piece of the pie. The debtholders could have just said, "Just sell it," but they didn't. They see a digital platform. They see growth.

Much of your career has been in sales and business development at Ziff. Do you have the experience to turn the company around and lead it out of bankruptcy?

I'm the right person to be leading the company. I've been at the company a long time. My management team and I really were the individuals responsible for building the digital platform that exists today in our company. We saw the digital platform monetized already in the sale of our B2B division for $150 million. The plan going forward is based on continuing to operate, understanding how to leverage our position to keep expanding the digital footprint and digital revenues.

Back when we started the restructuring process in August, perhaps my experience level -- as it related to restructuring issues -- then could have been in question. But fortunately we were able to retain very good advisers who have clear expertise in the restructuring business. We expect to be done with the process by midyear.

Do you expect any problem winning approval for your prenegotiated agreement?

The question at hand is not what a restructured business looks like going forward -- it's who gets what percent of the equity. I don't think the court ruling changes the end game for our business. We emerge with a delevered business, cash to operate and a capital structure going forward that supports and fits where the company wants to go.