Toronto-based Stewart House Publishing Inc. and Stewart House Distribution Services Inc., formed in May 2001 when McClelland & Stewart sold the Stewart imprint to management, have folded.

The companies, rumored to be in trouble for a number of months, filed for voluntary bankruptcy in mid-January. Fitzhenry & Whiteside, which rented its 76,000-square-foot warehouse in Markham, Ontario, to SHDS and became its first client in June 2001, took back the warehouse in September. At the same time, Stewart House closed its U.S. offices in Indianapolis, which were headed by Kenneth T. Proctor.

Stewart House's crash and burn is just the latest blow to the Canadian book industry, 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 ($3 million) in secured debt, with C$3 million of that owed to Laurentian Bank of Canada, the largest secured creditor. Stewart House has more than C$6.4 million outstanding in unsecured debt. Among the largest unsecured creditors are BBC Worldwide in New York, which is owed C$962,000; Quarry Press in Kingston, Ontario, owed C$626,000; and Technicolor Distribution Services Ltd., owed C$472,000. Some publishers awaiting payment from GDS also took a hit from SHDS's demise.

Peter Farkas, v-p of the accounting firm of Richter & Partners, which is serving as trustee for the bankruptcy, said he hopes to find a buyer for the publishing business within the next few weeks.