Canadian publishing was shaken yesterday by news that H.B. Fenn and Company, Canada’s largest book distributor and a stalwart in the industry for 30 years, had begun bankruptcy proceedings and appears to be shutting down, leaving its clients and authors scrambling. Fenn issued a brief statement Thursday, saying that it had filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act. That could mean a restructuring proposal to allow the company to continue operating, but in the statement CEO and founder Harold Fenn said, “My heart goes out to our over 125 employees and to the many publishers we represent, as well as the customers that have supported us over the years.” And indeed, according to sources, Fenn staff were told to pack up their belongings yesterday.

Katherine Wilson, who was a senior marketing and publicity associate, said the news was a shock to her and other staff. “I think everyone knew the company wasn’t doing particularly well, but no one thought it was at that level,” she said. Wilson said employees were referred to the Web site of Grant Thornton, the financial company that will oversee the bankruptcy. There was no indication the company planned to restructure and try to continue operations, she said. “It’s very sad,” she said. “No one is going to come out of this situation in a positive way, all the authors and publishers and everyone that I worked with. There’s no up side to it.”

The announcement caught publishers on both side of the border by surprise. Fenn has been the Canadian distributor for a number of U.S. houses, including Macmillan and Disney. Representatives from both companies were unavailable for comment Friday morning, though Macmillan is already believed to be developing a new plan for reaching its Canadian accounts.

Fenn’s troubles began to appear in January, when Key Porter Books, a publishing house owned and distributed by Fenn, announced that it was suspending temporarily operations, throwing the future of its list and authors into question. Kevin Sylvester, author of the children’s Neil Flambé series, said at the time that he hadn’t been paid for any of his 2010 book sales. The announcement from Fenn yesterday made matters worse. He told PW he still had not been paid and was depressed by the news from Fenn. “[I] don't know what will happen. I had a contract for four books. Two published. One written - now it's all in limbo. The third book is being presold. I recently bought 400 copies of my books from Fenn, worrying something was ominous.”

The statement from Fenn yesterday said the company “has encountered significant financial challenges due to the loss of distribution lines, shrinking margins and the significant shift to e-books, all of which have significantly reduced the Company’s revenues."

Fenn provided sales and distribution for over 40 companies and Key Porter published some of celebrity chef Gordon Ramsay’s books. The Fenn Publishing imprint and Key Porter specialized in books on hockey and had deals with the National Hockey League and the NHL Players Association. But Fenn was hard hit two years ago when one of its major clients, Hachette Book Group, opened a Toronto office for sales for its major national accounts such as Indigo Books and Music, Canada’s largest book retail chain, Costco and wholesale clients. Fenn continued to manage Hachette’s independent and library sales, but Hachette also moved its fulfillment service back to its U.S. warehouse.