In case you missed the news, late last week the judge presiding over the bankruptcy case of the Family Christian Stores (FCS), voided the auction results on which I reported three weeks ago (see that story here).
There were a number of reasons for the judge’s decision. On page eleven of his 48 page ruling the judge called the auction process “nothing short of chaotic” and said that some mistakes had been made (page 31). On page two he said that the winning bidder was “an indisputable insider.”
This cancellation of the winning bid was done despite the cooperation of the major creditors in the situation.
What Does This Mean?
In some ways it means the bankruptcy proceedings are back to square one. They could have another auction to sell the assets. Or FCS may just go through the normal reorganization provided by Chapter 11.
As part of the voided auction they had worked out arrangements with many of their creditors. So if they provide a reorganization plan that met their creditor’s approval they could go through the process and come out of chapter 11 and go back to normal business…albeit with a smaller footprint. A previous discussion had FCS closing 16 of their 266 stores as part of their reorganization.
The clock is ticking however. According to one report, FCS’ cash reserves are dwindling. They could run out of operational funds by mid-July.
Does This Change Anything for Authors?
Nothing has changed as far as authors are concerned. The money lost in the bankruptcy is technically gone already.
If the reorganization or new auction works, then 250 locations will still have stores. And that is a good thing. Those communities will continue to have a place where they can shop. Authors would continue to have the opportunity to hold book-related events, if that local store is able to do so.
If the reorganization or the new auction does not go through, then liquidation is a potential outcome. That would mean the closure of all the store. This would affect 250 communities, 3,000 employees, and the associated connections like landlords, tax revenue, and much more.
A full report on the judge’s ruling is available on the mlive.com site (click here).