When a private equity-backed firm files for Chapter 11 bankruptcy, its sponsors would typically arrange for their equity-stake to be wiped out. However, it seems Apax Partners will be taking a different road in the bankruptcy of Cengage Learning Inc. This was according to a report published by The Wall Street Journal.

Apax acquired a large chunk of textbook publisher Cengage's debt. The firm now aims to become one of the biggest equity holders of the publishing company after it exits bankruptcy, the report said.

Cengage was purchased by Apax and minor investor Omers Private Equity in 2007. At that time, the firms financed the deal with USD5.6 billion in debt. Cengage entered bankruptcy in July. This had put Apax in a position to have its 97% wiped out, the report explained.

Apax has separate funds for debt and equity deals. For similar companies, reaching into debt and equity using separate funds can result in conflicts of interest, The Wall Street Journal said. In the case of Apax, it is not yet clear which of its funds were deployed for Cengage's debt and which was used for equity purchases. The firm has yet to comment on the issue, the report stated.