Toronto's Stewart House Publishing Inc. and Stewart House Distribution Services Inc., which were formed in May 2001 when McClelland & Stewart sold the Stewart imprint to management, were the first casualties of the new year. The companies, which were rumored to be in trouble for some months, filed for voluntary bankruptcy in mid-January. Fitzhenry & Whiteside, which rented its 76,000-square-foot warehouse in Markham, Ontario, to SHDS and become its first client in June 2001, took back the warehouse in September. At the same time, Stewart House closed its U.S. offices, headed by Kenneth T. Proctor, in Indianapolis, Ind.

Stewart House's quick crash and burn is just the latest blow to the Canadian book industry, which is still reeling from the demise of General Publishing and its distribution arm, General Distribution Services, last summer. According to preliminary reports, Stewart House owes C$4.6 million, or more than U.S.$7 million, in secured debt, with Laurentian Bank of Canada being the highest secured creditor, owed C$3 million. Stewart House has more than C$6.4 million outstanding in unsecured debt, or nearly U.S.$10 million. Among the largest unsecured creditors are BBC Worldwide in New York, C$962,000, which is also a secured creditor; Quarry Press in Kingston, Ontario, C$626,000; and Technicolor Distribution Services Ltd., C$72,000. Some publishers awaiting payment from GDS also took a hit from SHDS's untimely demise.

According to Peter Farkas, v-p of the accounting firm of Richter & Partners, which is serving as trustee for the bankruptcy, Stewart House is open. However, no books have been shipped so far this year. Richter & Partners is hoping to find a buyer for the business within the next few weeks.