Chip MacGregor

August 17, 2015

The Family Christian Follies


Okay, it’s all settled. After months of arguing, pointing fingers, and making late-night calls that threatened to screw up the entire deal, the country’s largest Christian retail chain is going to remain open. That’s good news for writers (in a way). It’s also a mess (and I’ve reported on it here and here).

Late last week a bankruptcy judge approved the sale of Family Christian Stores (FCS) to a “new” entity, called FCS Acquisitions, which happens to be owned by the same folks who owned FCS. The price tag? About $55-million — which is interesting, since FCS owed about $127-million. So by going through a Chapter 11, they shed millions of dollars in leases, rent contracts, loans — oh, and debts to publishers. According to two sources, Credit Suisse (the largest of the creditors owed money, and the bank that kept FCS in business with a huge loan a few years ago) will be paid roughly 17.5% of what it’s owed.

Publishers, on the other hand, who were owed roughly $14-million, will be paid about 15% of what is owed them. Several publishers, including Baker, Harvest House, Tyndale, B&H, Crossway, Barbour, and others, are taking huge losses — many in the half-million dollar range. HarperCollins is having to write off millions. Gospel Light Publishing had to file for bankruptcy. And this means authors, whose books will be sold from store shelves, won’t actually receive any royalty from those sales because the publishers will never be paid for the books they shipped. I also heard from at least two suppliers that were going out of business because of the money that had tied up in products FCS took in and will never pay them for. And, despite their claim that all 266 stores will remain open and nobody will lose their job, estimates are that they’ll close at least 20 stores. It’s been a total black eye for Christian publishing.

So what was the response of the guys running Family Christian Stores? Did they apologize to suppliers for cheating them out of product, or to publishers for ordering books they knew they’d never be able to pay for? Did they do an interview, hat in hand, telling of their remorse over their past mistakes? Um… not exactly: “We can celebrate!” exclaimed CEO Chuck Bengochea, apparently checking in from the planet Mars. “God has a plan for Family Christian!” Yes — and hopefully that plan includes arranging to have the company run by people who can actually make money and pay their bills, and who won’t cheat their suppliers.

Okay, I’ve been accused of being too hard on the FCS brass. Maybe I am, though I’m just trying to report as I see the facts. The creditors voted 162 to 7 to take this deal, so while I doubt any of them are doing the Bengochea Happy Dance, it’s safe to assume most of them must have come to the conclusion that getting something is better than getting nothing. (The only other bidder in the proceedings was the combination of Hilco and Gordon Brothers, who take over distressed businesses, liquidate the inventory, and close the stores.) The fact is, I’m glad they are staying in business. Family Christian is one of the few chains that has great shelf space available to Christian books, and I represent a lot of Christian books. I genuinely hope the stores remain open, do well, and sell LOTS of books. But… this has been a mess, and I’ve been surprised the media hasn’t made more noise about it. I mean, we’ve had (1) FCS promising to donate all their profits to widows and orphans; (2) the owner of FCS insisting he be paid before his suppliers; (3) the owner try to buy back his company on the cheap, only to have the judge reject the whole proceeding as flawed; (4) the CEO of the company get reprimanded by the judge for calling the owner late at night in the midst to the proceedings to work an insider deal, nearly throwing the whole plan into chaos; and (5) vendors claiming FCS was taking in product up until the last moment, knowing full well they’d never be able to pay for it. In other words, it hasn’t exactly been our best hour.

But, um, yeah — we can certainly celebrate. I’ll celebrate that writers in CBA still have some brick-and-mortar store shelves to sell books from. I’ll celebrate that publishers in CBA showed enough grace that they were still willing to work with people who took their product and sold it but never paid for it. And I’ll celebrate that, at least for the time being, there will still be a chain of stores that aren’t owned by a denomination, so readers can find books that aren’t in a very limited theological window. But I’ll also remember that a lot of people didn’t get paid, some lost their jobs, and others lost their entire companies. So forgive me if I don’t go all Bengochea over the news.

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  • Nick Kording says:

    I think everything has already been said about the problems with the deal. Thanks Chip for an objective reporting. I appreciate it since I’ve read nil about this on other media sources. I am saddened any time Christians’ actions are more darkness than light, including my own. I can only trust in the verses in Romans 8:28 and Genesis 50:20 and trust God in this for the writers, agents and publishers, as well as those who work for FCB. Hopefully God’s Holy Spirit will turn the paths of those who went astray in their dealings.

    “And we know that all things work together for good to those who love God, to those who are called according to His purpose.” – Romans 8:28 (NKJV)

    “But as for you, you meant evil against me; but God meant it for good, in order to bring it about as it is this day, to save many people alive.” – Genesis 50:20 (NKJV) (I know it’s out of context, but I’m always hoping for a harvest when something bad/hard happens).

  • Ray Blackston says:

    The gospel often calls us, vocationally and relationally, to “take loss (of time and resources) so that others can win.” So the first question I would offer up to FCS management is “How does the gospel intersect with your business decisions?” Then I would point out that Jesus took personal pain in order to socialize gain, and yet from what Chip has shared it seems FCS has socialized pain in order to personalize gain. What a contrast for a CEO to ponder over his Tuesday morning cornflakes…

  • Cameron Bane says:

    There’s no way the FCS folks can pretty up this goat-grab. The thing is sad and venal and dripping with enough double-shuffle tomfoolery to supply the HuffPro columnists with bile for months. This was far from our finest hour.

  • T. G. Cooper says:

    These proceedings were certainly stained with a rank odor. The easy response is indignation. ‘How can Christians act this way?’ we ask. ‘It destroys our testimony.’ Then again, proceedings like this force us to reexamine why Christians write in the first place. If it’s for financial gain, then we must be competitive in the marketplace. That means producing a product people want to consume and offering at a competitive price. If that means chapter 11 restructuring, that’s the cost of business.

    I think these events force the entire Christian writing industry to reexamine not simply the way things work, but also the why. Why do we write? What are we trying to produce? If our writing is for financial profit, then we must function as the market allows. If we write for eternal significance, then we must be willing to forego financial gain in order for spiritual significance. The burning question is whether we can write for profit and eternal significance at the same time.

  • Patricia Zell says:

    My questions are where did they get the money to buy the company back, and who would be foolish enough to lend the owners that kind of money? Or, if the owners have that kind of money just sitting around waiting to be spent, then that speaks volumes.
    I really take issue with anyone claiming that God’s plan involves loss and destruction to other people, which is what these owners insinuate. I think a huge part of the problem is the attitude that God has teacher’s pets among humanity. I’m hoping once we get the basic story of the Bible straight that believers will understand that God loves every one equally and so should we. And, if we love, then we’re not going to rip people off.
    Why would anyone want to do business with these guys?

    • chipmacgregor says:

      They got the money to buy the company back from themselves, Patricia. (No kidding. They created a NEW company, and bought the OLD company for pennies on the dollar. That’s why this was such a questionable situation.)

  • The dirty dealings look just like the secular world to me, and I’d be willing to bet you a dollar to a doughnut that in a year or so he closes all the stores and runs with his money…that should have gone to widows and orphans… 😛

    • chipmacgregor says:

      I don’t know… he’s got a lot of money invested, Bonnie. My guess? The leadership looks to sell assets and get some cash back.

  • Preston Brad Rentz says:

    As I read your well written piece, I wondered; If we as believers don’t look any different than the world, where is our witness? I wonder how many folks will call Christians hypocrites over this? If they do to me, I won’t be able to argue their point.

    • chipmacgregor says:

      Correct. That’s part of why this has bugged me so much, Preston. Thanks for the compliment, by the way.

  • Stephen M. Miller says:

    Thanks Chip. I’m wondering – given the facts and you and agent Steve Laube have both reported today – why any publisher would work with FC in the future. Won’t some take their money and run? That’s what I’ve done when I’ve been unapologetically cheated. I leave and don’t go back.

    • chipmacgregor says:

      There’s no question this is going to change the way publishers deal with FCS. I can’t see anyone giving them anything but “cash on the barrelhead” terms, Stephen.

  • Laura Jensen Walker says:

    And this is one of the many reasons I love having you as my agent, Chip! Thank you for telling it like it is and not sugar-coating it with trite Christianese. Your honest insight is welcome and refreshing.

  • edhird says:

    Thanks, Chip, for this incisive analysis of a tragic situation. So many people have been hurt. Yet there has been very little media coverage. Yes, it is good that there is still a chain that is not owned by a denomination. I wonder if Family Christian Books sell John Chapman’s excellent book ‘The Five Languages of Apology’ and whether the FCE CEO & his Executive have taken time to read it. Walking the walk is more than just saying we’re sorry (Apology 1). It is also admitting that we are wrong (Apology 2), Making restitution (Apology 3), Trying not to do it again (Apology 4), and Requesting Forgiveness (Apology 5). Skipping these important languages often leads to covering over offence with christianese and cheap grace.

    • chipmacgregor says:

      I appreciate your comment, Ed. Good thoughts on apologies. And yes, I’ve been very surprised at the lack of media for this story.

  • Patrick Craig says:

    It is shameful, and the whole deal reminds me of the slimy behavior of the secular music industry—insider deals, cheating suppliers, shorting on royalties, overcharging on expenses, high salaries for executives…it’s enough to make you throw up. I’ve heard the “christian” justification,”God has a plan” too many times over the last years. It’s just another way to get around behavior that I’m sure offends the Lord. I know it offends me.

    • chipmacgregor says:

      Big news today — the head of Kregel revealed this deal will cause Kregel Publishing to lose $400,000. For a company of that size, that’s a tough, tough blow to take.

  • Daphne Woodall says:

    It’s been years since I’ve been in a Family Christian Bookstore. Mostly because they were not convenient and I preferred small independent stores which are now mostly obsolete. It is shameful that Christian and bankruptcy are mentioned in the same sentence.

    Integrity would be exhibited if the CEO, owners and top management take a significant pay cut and pledge to pay back their debtors for bad management. Just this morning a story is in the news of a Chic Fil-A store that closed for 5 months for a remodel. During that time they paid their employees while the restaurant was closed and also gave them a $1.00 an hour raise. Now that’s integrity.

    • Mirta Ana Schultz says:

      A supersignificant pay cut is in order for all those at the top who made bad decisions and end up benefitting from this (short- or long-term). If they get paid juicy salaries after this, it speaks a lot about how NOT Christlike FCS’s upper-ups are. The MISmanagers should feel as much or more pain than the ones who suffered loss in this deal. So, they can have 15% of their salaries. 😀

    • chipmacgregor says:

      Ha! That would be an interesting solution, Mirta.

    • chipmacgregor says:

      I wouldn’t hold my breath, Daphne.

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