In a move that should not surprise industry observers, especially literary agents specializing in children's books, Albert Whitman & Co. filed for Chapter 11/Subchapter V voluntary bankruptcy in the U.S. Bankruptcy Court for the Northern District of Illinois Eastern Division on Tuesday morning.

The petition, signed by AW&C president John Quattrocchi, disclosed that the assets of the children's book publishing company range between $1 million-$10 million, as do its liabilities. The top 20 creditors with unsecured claims are owed varying amounts totaling $1.65 million; claims range between $20,000 and $256,000. The three largest unsecured claims are: Lakeside Book Company ($255,883.48); Outlook Marketing Services ($200,000); and Hung Hing Offset Printing, ($162,714.41).

In a letter sent on Wednesday to authors, illustrators, and agents who have done business with AW&C that was also posted on its website, publisher Tom MacDonald, who was director of sales and marketing for five years before being named publisher last summer, informed them of the bankruptcy filing. He also pointed back to his December 2024 letter, which explained that due to the spike in book bannings and a general decline in book sales, the company has been unable to fulfill its financial obligations this past year, even after “restructuring our team, reducing our costs wherever possible, trimming our publishing list, and pausing new acquisitions.”

“Despite these considerable efforts and sacrifices made by everyone involved, the financial pressures have unfortunately continued and we have concluded that the most responsible way to protect the future of Albert Whitman & Company is to file for reorganization under Chapter 11,” MacDonald wrote, emphasizing the next sentence in boldface: “It’s incredibly important to us that you understand: this is about rebuilding, not closing down.” MacDonald promised to be as transparent as the law allows during the reorganization process about “outstanding payments and future royalties.”

The court has scheduled a meeting of creditors for May 29 at 1:30 p.m. CT at the Everett M. Dirksen U.S. Courthouse in Chicago.

Broken promises

The Authors Guild, which has been mediating for months between AW&C executives and Authors Guild members, responded to the news of the filing with “alarm,” according to a statement PW received Wednesday afternoon.

“For several months we have been in contact with the leadership of AW&C about late and outstanding payments on behalf of our members, and reversion of rights issues, with some progress in the form of released statements, payments, and rights reversions,” Authors Guild CEO Mary Rasenberger stated, disclosing that the advocacy organization had met in December with AW&C executives to discuss the concerns that authors and agents were expressing regarding the possibility that AW&C would file for bankruptcy, “which they dismissed as rumors” during the meeting.

“AW&C reassured us that they had no plans to declare bankruptcy and were experiencing cash flow problems because of book bans and non-renewal of foreign licenses,” she wrote. “We left the meeting with a framework for resolving late and non-payment issues, whereby we would escalate these issues to leadership for quick resolution and received their agreement to reverting rights back to the authors that wanted to leave their contracts due to payment problems.”

Rasenberger also disclosed that AW&C’s executives promised to alert the Authors Guild if they did file for bankruptcy, so that the guild “could move swiftly” to recover their rights for the authors before they became part of the bankruptcy estate.

“We are disheartened that despite our support and efforts to resolve outstanding issues, the publisher reneged on its promises,” Rasenberger declared. “We are looking into legal options for AW&C authors.”

A series of unfortunate events

PW has been monitoring the downward trajectory of the 106-year-old publishing company's relationships with its authors as well as literary agents for the past five years. Authors and agents have regularly contacted PW to complain of delayed and missing royalties, as well as a lack of transparency on the part of the publisher.

In spring 2021, the company launched a multimedia content company, Albert Whitman Multimedia, that never really took off and may have exacerbated the company's financial woes; its president, digital media executive Attila Gazdag, departed from that position two years later. Although AW&C sold the rights to the lucrative Boxcar Children series to Penguin Random House in spring 2023, the proceeds seems to have only temporarily bolstered the company’s coffers. By February 2024 and as recently as this February, authors and agents once again were reaching out to PW to report delinquent royalties and missing payments, including $10,000 owed to one agency and $20,000 owed to another. In one email sent to PW this past year, an agent wrote of her hesitancy in taking legal recourse against AW&C, or even to be a source in a PW report, writing, “I don't want to have a hand in bringing Whitman down. I just want my clients to be paid.”