Earful of Books Inc. continues its financial slide. A Securities and Exchange Commission filing made May 1 confirmed that all six company-owned stores ceased operations April 17 (News, Apr. 29). Earful has been unable to pay its federal payroll taxes, and paychecks to corporate store employees have bounced in recent weeks. In addition, Russell Grigsby, who served as interim CEO when Earful founder and CEO Paul Rush resigned on April 2, resigned his position on April 22, but remains a director. Myron Sappington is currently managing the company. To date, Earful has terminated all but three employees.
To explore its options, Earful has retained the law firm Strasburger & Price LLP of Austin, Tex. According to Stephen Roberts, an attorney working on the case, "It's very likely that Earful of Books Inc. will file bankruptcy in the very near future. I do not yet know what chapter it will be. I can tell you that the company is not operating at this point and that we are having conversations with potential purchasers. We are still trying to gather all the information we need to see where the company's value is and determine how we should proceed. It's a bit more complicated because Earful encompasses several companies." Roberts is referring to Earful of Books' reverse merger with American Absorbents Natural Products Inc. in 2001.
Roberts noted that if the company is purchased it would likely happen during, and not instead of, bankruptcy. As for the six remaining Earful of Books franchise stores, Roberts said, "We understand that they are still operating and still using the Earful of Books name. They will continue to operate rather autonomously until we figure out what we're going to do. Of course, selling the business would have to affect the franchisees as well."
