The saga of Carol Publishing took another twist last week when it was announced that PNC Bank, Carol's largest creditor, had agreed to return possession of the company back to Carol. On October 15, PNC took possession of Carol's New Jersey office and warehouse as well as its inventory, revenues and backlist. The newest move was intended to manage an ongoing marketing process and to facilitate the sale of Carol's assets. A small staff of five to six people is expected to be rehired this week to carry out those objectives; no new titles will be published.
As part of the agreement to regain control of its assets, Carol was expected to file for Chapter 11 protection last week, although no filing had been made by press time. The filing, to be made in New Jersey Bankruptcy Court, will list assets of $25.6 million and liabilities of $12.3 million. The filing should also allow Carol to convey clear title to its 60-80 publishing contracts and to its nearly 1300-title backlist, valued in September 1998 at $17.9 million. The company expects that these assets will be sold for substantially less than their appraised value in order to expedite potential transactions. Carol publisher Steven Schragis will be working with PNC to sell the assets.
The status of authors' rights to books that have not been published was not clear last week. Although most contracts contain clauses that call for a reversal of rights if a company files for Chapter 11, bankruptcy court judges have wide latitude in how to best dispose of a company's assets.
