From Publishers Weekly:
The Borders bankruptcy is one issue that the book industry may have wanted to put behind it. But although there were less than six months between the mid-February 2011 filing for chapter 11 bankruptcy protection to the liquidation of the remaining stores, the bankruptcy is far from over.
. . . .
Despite the closure of hundreds of stores one and a half years ago, it’s still not clear how much publishers will be paid on the dollar even with Manhattan District Court Judge Martin Glenn’s approval last October of the BGI Creditors’ Liquidating Trust’s request to claw back payments made during the 90-day period before bankruptcy papers were filed.
. . . .
Top 20 Largest Unsecured Publishing Creditors & Amount of Claim
- Penguin Putnam $41,118,914
- Hachette Book Group $36,879,656
- Simon & Schuster $33,757,445
- Random House $33,461,062
- HarperCollins $25,793,451
- Macmillan/MPS $11,434,306
- John Wiley & Sons $11,191,435
- Perseus Distribution Services $7,776,292
- Source Interlink Companies $6,879,906
- F&W Media $4,546,275
- Houghton Mifflin Harcourt $4,400,756
- Workman Publishing $4,003,126
- Diamond Comic Distributors $3,906,550
- McGraw-Hill $3,093,871
- Pearson Education $2,784,766
- Rosetta Stone $2,226,553
- National Book Network $1,956,713
- W.W. Norton & Company $1,940,826
- Zondervan $1,886,752
- Hay House $1,886,752
Link to the rest at Publishers Weekly and thanks to Abel for the tip.
So here’s a question PG hasn’t seen discussed in any of the Borders bankruptcy stories he’s read – What’s happened to authors’ royalties?
If Penguin Putnam was owed over $40 million at the time the bankruptcy was filed, presumably most of that sum was for paper books that Borders had purchased from Penguin. $4-6 million of that amount would have been paid to authors if Penguin had received received such payment.
So, did Penguin, et al, pay the royalties to authors or not? Were these royalties (paid or unpaid) reflected on royalty reports in any way?
Off the top of his head, PG doesn’t remember seeing any provision in a Big Publishing publishing agreement that addresses what happens to royalties if a bookstore files for bankruptcy.
If print royalties are calculated based on the list price of a book, are they due to an author regardless of whether the bookstore pays for the book or not so long as the book has been sold by the publisher and not returned by Borders?
A royalty provision based on net revenue received by the publisher as is typical for ebooks would seem to let publishers off the hook for those unpaid royalties.
Some contract provisions describing royalty reports call for a statement of the “sales” of a hardcover or paperback Work without expressly requiring that a publisher actually be paid for those sales. If Borders didn’t return any books, a publisher probably couldn’t handle royalties accruing from unpaid book bills under a reserve for return clause.
Does anyone know if any of the publishers listed as creditors of Borders communicated with authors regarding the status of royalties for paper books sold to Borders?