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.