After months of uncertainty, efforts by former authors of MacAdam Cage (the now-defunct San Francisco indie publisher), to retrieve the print rights to their books appear close to a resolution. According to Jan Constantine, general counsel at the Authors Guild, print rights to titles published by MacAdam Cage automatically reverted to their authors 60 days after the company filed for Chapter 7 bankruptcy on Jan. 17, 2014. Constantine said that, under the relevant bankruptcy statute, rights reverted automatically to authors in mid-March. At that point, according to Burt Weston, a bankruptcy lawyer at the firm Garfunkel and Wild who is consulting with the Authors Guild, since the trustees overseeing the bankruptcy did not “assume or affirm the author agreements,” those agreements “are rejected and terminated.” Weston further noted that the final decree closing the bankruptcy case was handed down on April 4 and that the final report was submitted the day prior, on April 3.
Constantine said the reversion is “automatic,” and authors seeking to resell those rights should secure a copy of the bankruptcy trustees’ final report to “be comfortable,” and to reassure potential licensees that they have retrieved their legal rights to republish. Constantine also said it was likely that the automatic reversion of rights after the bankruptcy closing included subsidiary rights, such as movie and TV options. She said that there is no need for the authors to notify the now defunct publisher/debtor that they are reclaiming their rights.
This determination offers some resolution to a situation that continues to be confusing for the former authors and creditors of MacAdam Cage. Indeed, control of the house’s e-book rights—essentially sold by company founder David Poindexter to an e-book publisher based on the Isle of Man—as well as the payment of e-book royalties, continues to be unclear.
Launched in 1999 by Poindexter, a commercial print broker turned literary book publisher, MacAdam Cage once exemplified the best characteristics of independent publishing—small, plugged into the local literary scene, and specializing in discovering emerging writers and turning them into of authors of impressive literary standing.
Despite publishing such acclaimed works as Audrey Niffenegger’s The Time Traveler’s Wife (2003) and Craig Clevenger’s The Contortionist’s Handbook (2002), beginning around 2008 the company struggled with finances, compounded by complaints from its authors of nonpayment and lack of communication. After several attempts to revive the company, Poindexter died in April 2013 leaving behind a chaotic financial and licensing situation that former MacAdam Cage authors, general creditors, and even Poindexter’s close friends have been dealing with for nearly a year.
While Poindexter’s widow, Emeigh Poindexter, is executor of the Poindexter estate, she appointed Pat Walsh—who worked as editor-in-chief at the house (although he left and returned several times over the course of years)—to help clear up her husband’s MacAdam Cage dealings. Walsh has also been named a defendant in at least one of the suits filed against MacAdam Cage. In conversations with PW, Walsh described Poindexter as a charismatic figure who evoked intense loyalty from friends and strove to “make people’s dreams come true.” But, according to Walsh, Poindexter was also a mercurial businessman given to quirky decisions—including selling off e-book rights, borrowing large sums from his friends or even from MacAdam Cage employees in order to keep the house solvent. In addition, Poindexter had a habit of creating nonstandard structures to secure his obligations and to deliver payments to his creditors.
One of those structures, Backlist Holdings, was the subject of a lawsuit brought against Poindexter and others (including Walsh) by a former MacAdam Cage designer, Dorothy Smith. In the suit, Smith charged Poindexter with fraud, claiming he borrowed $300,000 from her that was never repaid. Smith claims that Poindexter moved revenue-generating assets from MacAdam Cage to Backlist Holdings, owned 50/50 by Poindexter and an old friend, Brooks Bayly, and listed in the company’s bankruptcy filing. Walsh explained that, much as he had with Smith and other friends, Poindexter borrowed money from Bayly to keep MacAdam Cage afloat. He then created a financial structure comprised of revenue-generating backlist contracts to secure the debt and—contrary to Smith’s claims of fraud—used the structure to generate an income stream to repay Bayly after MacAdam Cage’s costs and royalties were deducted. Walsh described it as a “dividend more than a payment.” According to Walsh, the Smith suit has been “tolled,” essentially suspended unless or until evidence of actual fraud surfaces.
MacAdam Cage published about 150 authors over the course of its publishing life and, at the time of the bankruptcy filing, listed the rights to about 290 titles. At the time of Poindexter’s death, the house was self-distributed, its fulfillment handled by Publisher’s Storage and Shipping, a warehouse in Ypsilanti, Mich. The bankruptcy filing and the subsequent reversion of rights provides these authors with some measure of relief, at least for print rights.
While former MacAdam Cage authors may have recouped their print rights, e-book rights are likely to be a bigger hurdle. In 2008 Poindexter essentially sold the e-book rights for the entire MacAdam Cage inventory for about $300,000 to MP Publishing, an e-book converter and publishing operation based on the Isle of Man and owned by Mark Pearce, in a deal that Walsh described as initially an e-book conversion and licensing deal that ultimately morphed into a partnership with Pearce negotiated by Poindexter. Walsh even worked for a time for MP Publishing before returning to MacAdam Cage. However, even Walsh is unclear how the deal is structured, noting that Poindexter renegotiated it at least twice. Walsh said at the time that he and Poindexter did the deal with MP, MacAdam Cage “couldn’t afford to convert to digital,” and “didn’t value e-books rights,” and Pearce offered far more money than Poindexter had expected.
A number of Macadam Cage authors and agents contacted by PW said they have not received any e-book royalties from MP, and some were surprised to learn that they may have no control over their e-book rights. Dayne Sherman, author of the novel Welcome to the Fallen Paradise, said he has never received any e-book royalties from MP Publishing. Sherman told PW, “I have not gotten one cent of e-book royalties” from MP Publishing. He also mentioned that he has corresponded with 30 MacAdam Cage authors and none of them have ever received an e-book royalty from MP Publishing. Phone calls and emails sent to MP Publishing by PW for comment received no response.