Bookpeople Files for Chapter 11 Protection
by Jim Milliot -- Publishers Weekly, 9/1/2003
Bookpeople, one of the last independent wholesalers on the West Coast, filed for Chapter 11 bankruptcy protection August 22 after St. Cloud Capital decided against investing in the company. Steven Kerr, the consultant who has been working on the deal, said that after completing its due diligence, St. Cloud determined that it would require more than the $2 million the company was prepared to invest in Bookpeople to turn the company around.
Although publishers agreed to a plan in July that would have paid a percentage of the money owed them by Bookpeople (News, July 21), many publishers have been reluctant to supply the wholesaler with new product, which has led to a drop in sales in recent months. In addition, Bookpeople's business has been hurt by the decline of independent booksellers.
Trevor Yamamoto, Bookpeople CFO, is overseeing the day-to-day operations of the company along with general manager Don Benson. Yamamoto said the company is exploring a number of different options about how to best emerge from bankruptcy: while the sale of the company's assets is one alternative, he is talking to investors about providing funding that would keep Bookpeople an independent company. Bookpeople is also considering spinning off its profitable fulfillment business and its Words distribution subsidiary, both of which are doing well. As of August 30, Kerr is no longer involved with Bookpeople.
During the reorganization process, Bookpeople is continuing to operate its wholesaling, distribution and fulfillment services. Yamamoto said Bookpeople, which has about 52 employees, still has sufficient operating cash to meet its payroll and day-to-day obligations for at least six months. The company has assets of about $5 million, debts of $6 million and no secured creditors.
While Bookpeople has a reputation as an important distributor of alternative titles from independent publishers, about 60% of its business is with major publishers. Its largest unsecured creditor is Random House, which is owed nearly $1 million.
