Weeks of uncertainty over the future of the LPC Group, currently in Chapter 11 bankruptcy, may be ending after LPC Group president David Wilk announced that he will submit a liquidation plan to the creditors' committee this week, with a vote expected in early July.
Wilk told PW that the liquidation plan is essentially a settlement to avoid the cost of resolving the dispute over ownership of funds attached by the American National Bank of Chicago. LPC was forced to file for Chapter 11 protection in April (News, Apr. 8), when the bank demanded payment on a longtime revolving line of credit and placed a lien on more than $1 million in LPC cash receipts earmarked to pay publishers.
Wilk said he has opted for liquidation because litigation to challenge the bank's lien would be costly and time consuming. He also said that losing the case would put any funds that could be returned to LPC publishers at risk. "I think we've got a pretty good percentage on the dollar for the publishers," Wilk said, adding that if it is approved, the plan will terminate all publishers' contracts and will dissolve the LPC Group by July 31.
However, while Wilk maintains that his liquidation plan represents the best option for publishers, not everyone involved in the case agrees. Tracey Saxe, lawyer for Common Courage Press, called Wilk's plan "unacceptable," because it treats publishers as unsecured creditors; Saxe believes that publishers are secured creditors. Saxe also pointed to a bankruptcy court ruling that said three presses—Park Avenue Press, Common Courage and McBooks—can remove their books from LPC's warehousing partner, Client Distribution Services. Saxe said he believes that ruling reinforces publishers' claims on the funds attached by the bank.
The liquidation plan comes weeks after Wilk said he was confident that he would regain the funds, which represent publisher sales and potential author royalties, and would pay off LPC's creditors. PW also asked Wilk about LPC creditors' claims that they may have been misled about the financial health of LPC, particularly the amount of debt the company was carrying. "Well, we didn't reveal all our finances to our clients," Wilk said. "And we did lose money in prior periods, but I don't think anyone was misled."
Wilk estimated that the LPC Group had approximately $8 million in debt ($1.4 million of that has been attached by the American National Bank) at the time of the bankruptcy filing, and approximately $6.7 million in assets. The LPC Group has about 85 clients and about 11 employees.
CDS v-p Steve Black told PW that the company is in discussions with a number of LPC clients to switch to CDS. Black said that CDS offers a full range of sales and marketing services in addition to shipping, billing and customer service. "Obviously, we're talking to the biggest publishers," he said. "We've already got their books in the warehouse." Black also acknowledged interest in certain LPC employees.
Several LPC clients, such as comics and graphic novel publishers Dark Horse Comics and Drawn & Quarterly, have said that they will announce new distribution partners within the next few weeks.
LPC also owns four publishing imprints (Papier Mache Press, Firebrand Books, Olmstead Press and Albion Press) that offer several hundred titles combined. Wilk noted that they are also up for sale.
