Letters went out in late November to Carol Publishing authors informing them that as long as Carol is in bankruptcy, author contracts will remain part of Carol's estate and cannot be reclaimed by authors. Carol filed for Chapter 11 protection November 12 in the U.S. Bankruptcy Court for the District of New Jersey.
The letters, which were written by Carol's attorneys, noted that while the contracts may contain a clause that permits authors to terminate their contracts with the publisher in the event of a bankruptcy filing, "these clauses have been found by the Bankruptcy Courts to be void and unenforceable." Attorneys contacted by PW agreed that in Chapter 11 cases, bankruptcy court judges have control over a company's assets, and that Carol authors would be best advised to wait and see who eventually acquires their contracts.
According to the letter, an application is expected to be filed soon with the Bankruptcy Court to sell substantially all of Carol's assets to another entity, who will then be responsible for fulfilling the obligations contained in all acquired contracts. Carol's attorneys hope to reach an agreement to sell the assets within the next 60-90 days. Sources said a wide range of companies, both in and out of publishing, have expressed interest in Carol's titles.
