Photo credit: www.publishersweekly.com
Albert Whitman & Co. Files for Chapter 11 Bankruptcy
In a development that was anticipated by those familiar with the children’s book publishing landscape, Albert Whitman & Co. (AW&C) has initiated a voluntary Chapter 11/Subchapter V bankruptcy filing in the U.S. Bankruptcy Court for the Northern District of Illinois Eastern Division.
The formal petition, signed by AW&C President John Quattrocchi, indicates that the company’s assets and liabilities are both estimated to be within the range of $1 million to $10 million. According to the filing, the top 20 unsecured creditors collectively hold claims amounting to $1.65 million, with individual debts ranging from $20,000 to $256,000. The three largest claims include two printing and marketing companies: Lakeside Book Company ($255,883.48), Outlook Marketing Services ($200,000), and Hung Hing Offset Printing ($162,714.41).
In a letter addressed to authors, illustrators, and agents associated with the company and also shared on its website, Publisher Tom MacDonald communicated the details of the bankruptcy filing. He referred back to a previous letter from December 2024, where he discussed the challenges posed by increasing book bans and declining sales, which had hindered the company’s ability to meet its financial obligations over the past year. Efforts had been made to restructure, cut costs, refine their publishing list, and halt new acquisitions.
“Despite the extensive efforts and sacrifices made by all parties, financial challenges have persisted. Thus, we have determined that seeking reorganization under Chapter 11 is the most prudent path forward to ensure the longevity of Albert Whitman & Company,” MacDonald emphasized, stressing that this move aims at recovery rather than liquidation. He also assured stakeholders of transparency regarding outstanding payments and future royalties throughout the reorganization process.
A meeting for creditors has been set for May 29 at 1:30 p.m. CT, taking place at the Everett M. Dirksen U.S. Courthouse in Chicago.
Concerns from the Authors Guild
The Authors Guild, which has been in negotiations for several months with AW&C regarding overdue payments and rights reversions for its members, expressed significant concern upon hearing the news of the bankruptcy filing. According to a statement received by PW, CEO Mary Rasenberger noted that discussions with AW&C had previously led to some positive outcomes, including partial payments and agreements on rights reversions.
Rasenberger recounted a meeting held in December where the AW&C leadership dismissed bankruptcy rumors, attributing their cash flow difficulty to external factors such as book bans and the non-renewal of international licensing agreements. “They reassured us that there were no plans to declare bankruptcy and provided a framework for addressing payment issues,” she stated. They had also committed to notifying the Authors Guild should a bankruptcy filing occur, allowing for proactive measures to protect authors’ rights.
“We are deeply disappointed that, despite our collaborative efforts to address ongoing issues, AW&C failed to uphold its commitments,” Rasenberger said, adding that the Guild is exploring potential legal avenues to assist AW&C authors.
The Downward Trend
PW has been tracking the ongoing challenges faced by the 106-year-old publisher and its relationships with authors and agents over the past five years. Reports from authors and agents reveal a consistent pattern of delayed or missing royalty payments and a general lack of transparency from the publisher.
In 2021, the company ventured into multimedia through the establishment of Albert Whitman Multimedia, an initiative that ultimately struggled and could have further strained their finances; the president of that division, Attila Gazdag, left two years later. Although AW&C’s sale of the rights to the profitable Boxcar Children series to Penguin Random House in 2023 provided a temporary financial boost, issues with royalty payments resurfaced by early 2024, with multiple authors and agents reporting unpaid amounts totaling tens of thousands of dollars.
A representative from the agency mentioned in their communication to PW that they were wary of pursuing legal action against AW&C, expressing a desire to avoid contributing to the company’s downfall while still seeking compensation for their clients.
Source
www.publishersweekly.com