General Publishing Co., one of Canada's largest publishers and distributors, last week received protection from creditors under the Companies' Creditors Arrangement Act—similar to Chapter 11—buying it 30 days to begin implementing a restructuring plan. If the restructuring proves unsuccessful, the demise of the company, which includes General Distribution Services, Stoddart Publishing Co. Ltd., The Boston Mills Press Ltd., House of Anansi Press Ltd. and Musson Book Company, could destabilize the publishing industry.
General's financial woes stem mainly from GDS, which services approximately 200 publishers, over 60 of which are Canadian-owned. Jack Stoddart, General's chairman, cited the past practices of Chapters under the former management and the recent departure of GDS client publishers, including Key Porter Books and Douglas & McIntyre, as reasons for General's financial difficulties.
Stoddart said the company has remedied the central problem plaguing it, specifically that it billed customers directly and then paid publishers for sales. Under the former Chapters' management, payment dates ran anywhere between 110 and 250 days and this procedure constituted about 50% of General's bookstore volume. "The publishers, whether in the United States or Canada, have had this damage all along. We've banked publishers through a lot of this time frame—three or four years—but at the end of the day the damage done by the abuse of the old Chapters was huge," Stoddart said. Stoddart said the Competition Bureau should never have allowed the merger of Canada's three largest book retailers in 1995 to form Chapters.
"We could have folded our tent and gone home then—certainly it was a bleak outlook—but we got this far and I think the new undertaking by the new Indigo-Chapters makes it a viable business again," elaborated Stoddart. "We had hoped that we would make it through to the good days again with the distribution company, but unfortunately, the pressures were too great."
Stoddart believes that the transition period will result in four continuing operating companies; he expects GDS to be sold and said interested parties are already at the table. The three publishing companies remain viable, although Stoddart is not sure whether or not they will continue to be owned by General.
Monique Smith, the executive director of the Association of Canadian Publishers, believes that Canadian publishers will suffer ramifications stemming from General's current financial situation, but she remains hopeful. "They've been known to weather storms before, so we hope they can weather this one," Smith said.
Not all of General's clients are willing to wait around until the company reorganizes. Toronto-based Hushion House Publishing Ltd., a sales marketing company that represents 300 small Canadian presses, claims that General owes it around C$1 million—money Hushion House requires to continue functioning. "There's no way that I can recover $1 million. We owe a big portion of that," Hushion House co-partner Jules Beauregard said. Hushion House is currently trying to obtain a court order that will allow the company to move its books from GDS's warehouse to Georgetown Terminal Warehouse.
"If I can't ship books for three months, we're finished. I can survive for maybe six weeks or so. After that, I'm dead," Beauregard said.
