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Looks like someone at Bloomberg has a pretty good source at Kirkland & Ellis, a law firm which appears to have turned into the corporate grim reaper.

In January, Bloomberg reported that Charter Communications (NASDAQ:CHTR) had hired the firm to consider a possible bankruptcy filing. (And a month later, they actually filed Chapter 11.) Tuesday, Bloomberg was at it again, reporting that Blockbuster (BBI) had hired Kirkland to mull a potential bankruptcy filing; the company later confirmed that it has hired Kirkland but said it does not have any plans to file for bankruptcy.

Wednesday, Bloomberg is reporting that closely held Reader’s Digest Association (NASDAQ:RDA), publisher of the magazine of the same name has hired - you guessed it - Kirkland & Ellis to explore - you guessed it again - restructuring options, including a possible bankruptcy filing, citing their old friend “a person familiar with the situation.”

Reader’s Digest was acquired in 2007 for $2.4 billion by a group of investors led by Ripplewood Holdings. The Bloomberg piece notes that Moody’s said in a credit opinion on February 18 that Reader’s Digest’s capital structure appears unsustainable and that it could violate covenants or restructure within 18 months. On January 28, the company announced a plan to cut 3,500 employees, or about 8% of its staff. The company also said it would ask U.S. workers to take five days of unpaid leave in 2009 and 2010, and suspend its matching contributions to 401(k) retirement plans.

The Bloomberg story notes that the company’s $600 million of 9% notes due 2017 wre recently trading at 9 cents on the dollar; it adds that the LBO was backed by a $1.31 billion term loan and $300 million of revolving credit, of which $206 million was oustanding at the end of 2008.

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Source: Reader’s Digest: Bankruptcy Candidate Du Jour