Less than a year after shutting down its Chicago warehouse and offices and moving to Milford, Conn., the LPC Group, a book distributor specializing in small to medium-sized publishers, has filed for Chapter 11 bankruptcy in New Haven.
David Wilk, president of LPC Group, told PW he is confident that the firm will reorganize and emerge from bankruptcy. "As much as is possible under the circumstances, we're going to go forward--business as usual," he said.
His partners and clients largely echo his optimism. CDS, which runs the warehouse that fulfills book orders to LPC clients, is listed as a creditor in court papers, but the company said it will continue shipping. "We have a contract," said CDS's Gilbert Pearlman, adding, "We're going to do everything we can to help them." CDS's cooperation is essential to the viability of LPC; if it stops shipping books, LPC's business falls apart.
Over the last year, LPC has been aggressively pursuing graphic novel publishers eager to sell their titles in general bookstores. The three largest unsecured creditors are all graphic novel publishers: Mixx Entertainment ($767,000), Dark Horse Comics ($661,000) and Marvel Entertainment ($618,000). Other unsecured creditors include Park Avenue/ Oklahoma ($426,000) and McBooks Press ($318,000).
But the primary issue, particularly for independent publishers, is cash flow. No one knows for sure when this will be resolved or how much money owed to publishers will eventually reach them. According to Wilk, LPC was forced to file bankruptcy after the Chicago-based American National Bank demanded payment on a longtime revolving line of credit and took possession of more than $1 million in LPC cash receipts, money earmarked to pay publishers. Wilk told PW the bank debt predates his joining the company.
Wilk said he is "very confident" that LPC will regain the money and be able to pay its creditors. "Every legal opinion we've received is that that money belongs to the publishers," he said. This is the second time a Wilk company has been forced to declare bankruptcy. In 1995, the Inland Book Company, cofounded by Wilk, was forced to filed Chapter 11 bankruptcy, and some of its assets helped form the basis of the LPC Group. Other assets were acquired by Koen Book Distributors.
LPC represents more than 85 publishers, and it is unclear how the filing will affect them. And while Wilk said he hopes to resolve this crisis "ASAP," he acknowledged that "small publishers are burdened even if this thing lasts a month."
Chris Staros, publisher of Top Shelf Productions, a small graphic novel publisher in Marietta, Ga., told PW that he learned of the bankruptcy when a $20,000 check from LPC bounced. Staros was supportive, but he also said that initially the filing threatened to put him out of business. But an e-mail appeal has brought in hundreds of new orders and saved the company.
Dark Horse Comics, a comics and graphic novel publisher in Oregon, offered its full support to LPC. Michael Martens, v-p, sales and marketing at Dark Horse, praised LPC's business model and its sales force: "They sell our entire line. We've had our best month in the book trade," Martens said. "We believe this is a one-time hit to LPC's cash flow and additional financing will be secured by LPC to ensure continuity in staffing and shipments."
Image Comics, an Orange, Calif., graphic novel publisher, is owed $166,000 by LPC. Image publisher Jim Valentino told PW he is "cautiously optimistic. It's a restructuring. We're going to stay the course."
