The likely new owners of the company would be led by the hedge fund Chatham Asset Management.
McClatchy is also known to have large pension obligations that eat into its profits.
McClatchy did not announce any layoffs and tried to reassure employees, saying that while "we are always looking at opportunities to improve operational efficiencies", the Chapter 11 process is "not geared around cost take-outs".
"The greatest crisis in American journalism is the death of local news", Baquet said at the International News Media Association World Congress at the time. "That's not enough to sustain the newsrooms McClatchy inherited from Knight Ridder".
This reorganization is not unprecedented among newspaper companies.
That, too, would require bankruptcy court approval.
Dan Kennedy, a journalism professor at Northeastern University who follows the sector, said McClatchy's woes follow "the narrative that we've seen with corporate chain ownership" by accumulating debt that kept it from investing in future technologies.
The McClatchy development is the latest shakeup for a print news industry that's forced to adapt to a new, digital-focused media landscape.
The company said it has obtained $50 million in debtor in possession financing from Encina Business Credit. For example, Google made $134 billion in digital ad revenue a year ago, while Facebook took in $69 billion.
Digital-only subscriptions have increased nearly 50% year over year, McClatchy said, and subscriptions are now roughly evenly balanced between total audience and advertising revenue, with digital accounting for 40% of that revenue and growing.
McClatchy has struggled to pay money owed to its pension fund and has been in negotiations with the Pension Benefit Guaranty Corporation, a federal guarantor of pensions, to assume control.
The McClatchy Co., the second largest local news company in the USA, filed for bankruptcy on Thursday.
The so-called "managed bankruptcy", Franklin said, gives McClatchy a chance to keep the lights on and significantly reduce its debt load brought on by pension payments promised in the days of yore, as newspapers are left competing for digital ad dollars primarily soaked up by social and search.
The company will, however, be removed from the New York Stock Exchange and will transition to a private holding instead of a public one. Chatham Asset will be the new majority owner. "McClatchy doesn't undertake this restructuring lightly", Craig Forman, CEO, McClatchy, said in a statement online. We are privileged to serve the 30 communities across the country that together make McClatchy and are ever grateful to all of our stakeholders - subscribers, readers, advertisers, vendors, investors, and employees - who have enabled our legacy to date. Chatham has shown some commitment to digital investment, Doctor said, but "whether it's going to be sufficient to turn that business around is another question".
Last year, New York Times Executive Editor Dean Baquet made a dire prediction that a number of local newspapers will die in the "next five years". Amazon founder Jeff Bezos owns The Washington Post and has invested in its newsroom.
But the arrival of moneyed interests can prove fleeting.
The company started out of Sacramento in 1857 following the Gold Rush, creating a paper called the Sacramento Bee. That paper became the Sacramento Bee. McClatchy is still based in Sacramento.