Last October, Denver's Tattered Cover bookstore announced that it would file for Chapter 11 bankruptcy, close three stores, and let go of 27 of its more than 100 employees. On Tuesday, Bended Page, LLC, the ownership group that controls Tattered Cover, filed the first part of its plans for reorganization under Chapter 11 Subchapter V in the U.S. Bankruptcy Court for the District of Colorado.
This plan reasserted much of what was initially proposed in October, including the closing of three of the company's seven locations—in Westminster, Colo., Colorado Springs, and Denver's McGregor Square—all of which were shuttered in October. Four stores, including the company's flagship store on Denver's Colfax Ave., and the stores at the Denver International Airport—which Tattered Cover runs in partnership with Hudson Booksellers—will remain open.
The company initially said that it owed some $1 million to publishers, as well as more than $375,000 to Colorado's Office of the State Auditor for abandoned gift cards. This week's filing amends that number to $3.1 million in outstanding debt to creditors in unsecured claims, according to The Denver Business Post. This includes $500,000 owed to former CEO Kwame Spearman, who led the store from December 2020—when he was part of a team that purchased the store—to last spring, when he stepped down to make unsuccessful bids for the mayorship of Denver and, later, a seat on the Denver school board.
Furthermore, the filling states that there are $820,000 in secured claims owed to five lenders, including $300,000 owed to its board of directors. Interim CEO Brad Dempsey, who was hired in July of last year, has opted to waive his claim to a promissory note of $25,000. Additional information is forthcoming, according to the claim.
The Subchapter V portion of Chapter 11 was enacted by Congress in 2020 to provide a streamlined process for small companies to reorganize. The company has raised commitments for new financing. If the plan is approved, Tattered Cover will have access to up to $1 million in debtor-in-possession financing, provided by a new company formed by current company board members and investors including Leslie Rainbolt and Margie Gart.
