Access Publishers Network bankrupt
Despite the public glamour that Oprah Winfrey has bestowed on the book business, publishing and selling books is a high risk, low margin, irrational way to make a living. Within the publishing industry, master distribution companies may have the toughest go of it.
The role of the master distributor is to represent, sell, ship and handle the billing for many individual publishing companies, most of which would be unable to establish vendor accounts with retailers on their own. Master Distributors make their money by taking a cut, albeit a very small cut, of the price of each book sold (which is already discounted) and by charging fees to their client publishers.
This is quite similar to retailing in any other business with one exception: Since the depression, most books in bookstores are sold on consignment. Which means that when you browse the shelves of Horizon Books in Traverse City or Petoskey, or any chain bookstore, the books you’re flipping through aren’t owned by the bookstore. They’re owned by publishers, who don’t get paid for them until they’re purchased by you, the customer. If they’re not bought in, say, three to six months to a year on average, the bookstore returns the books to the distributor.
In the past few years, returns have devastated distributors, and the publishing industry has been repeatedly jolted by the bankruptcy of several of these companies. Recently a local company, Access Publishers Network of Grawn, joined those ranks.
On July 7, with more than $5 million in debt, according to a U.S. Court Trustee, Access was forced to file Chapter 7 Bankruptcy in Federal Bankruptcy Court in Traverse City by a group of creditors. The Bankruptcy Order was issued by the court on July 10 and Access converted the filing to Chapter 11, with the potential to reorganize, on July 11.
Access Vice President John Lindberg confirmed the filing, and said “operating losses” were the reason for the bankruptcy. He said that the company was planning to reorganize by selling to “a recognizable publishing company.”
“We have 11 inquiries in the form of confidentiality agreements,” said Lindberg. “There are three groups that we have been talking to: publishers, other distributors and service providers.”
Access has had a complex company history. The core of the business was formed in the mid-1990s when Lindberg sold his previous company, Lindberg Plastics, and entered into a partnership with Jerrold Jenkins, who is now president of The Jenkins Group, a book packager in Traverse City. Together, the pair founded Publishers Distribution Service (PDS).
In September 1996, Lingberg bought out Jenkins and then sold the company to a group of three investors. The trio–David Reecher, Dan Pena and Jose Alverez–together formed Great Wisdom Publishing Co., of which Access is a wholly-owned subsidiary.
Great Wisdom Publishing Co., in turn, is owned by International Media Holdings. Reecher is President and CEO, Pena was Chairman of the Board and Alverez was CFO. Lindberg stayed on as an employee and invested $600,000 of his share of the sale of PDS into the new company. Pena was later ousted from the Board and has since filed suit in Florida against International Media Holdings.
With a new name and a new business plan–to acquire publishing-related companies and place them under the Wisdom umbrella–a California New Age publisher, Astro Communication Services, and later a Florida publisher, Ron LeGrande Publishing, were brought into the fold.
Astro, an astrology data collection service and publisher, was purchased with half of a $1 million loan that International Media Holdings took out on Access’ behalf. Even though Access was the creditor, only $500,000 of the $1 million loan was put back into the company. The remainder, or a portion of the remainder, was used to acquire Astro.
Reecher and Alverez also hired a Bantam Doubleday Dell Publishing (BDD) executive, Paul Stafford, as Chief Operating Officer of Wisdom. He in turn hired another BDD exec, John Hummel, as vice president and director of sales for Access. Despite the fact that under Stafford’s leadership Wisdom grew from a $1.8 million company to a $5 million-plus company in 16 months, according to reports, by 1998, Stafford and Hummel had been fired.
Lindberg served as interim president, and months later, a “turnaround expert,” Chris Cooley, was hired. Cooley lasted only three months, and by the spring or summer of 1999, depending on reports, Access was beginning to lose money and had an erratic schedule of payment to publishers.
A group of those client publishers organized, and now form the core of a creditor’s committee represented in the bankruptcy proceedings by a local attorney, Fredrick Bimber.
On Sept. 22, a meeting of the creditor’s committee was held in Grand Rapids. The gathering gave both the assistant U.S. Trustee Daniel Cassamata, and individual creditors the opportunity to question the debtors–Reecher and Lindberg represented Access at the meeting–under oath.
Surprisingly, Lindberg said he had not been given access to any of Access’ financial statements since Nov. of 1999. In addition, it was revealed that all payments Access received from retailers and wholesalers for books sold went directly to a lock box controlled by Riviera, a finance company which extended Access the $1 million loan.
In order to pay its client publishers, Access would then borrow money from Riviera against its receivables. As a comparison, imagine borrowing money on Monday against the paycheck you were promised on Friday.
At a Sept. 27 hearing at the Bankruptcy Court in Grand Rapids, Access was given court permission to borrow additional funds from Riviera in order to stay open for another month while Lindberg continues his efforts to sell the business.
“We’ve got a core group of 14 people who would be available to that new owner,” said Lindberg. “Our receivables are still above $900,000 and we’ve sold $5,000 worth of books just since the filing. I have been face to face with hundreds or maybe thousands of micro presses and this is nothing less than heartbreaking. These are the most wonderful, intelligent, creative, dynamic fellow entrepreneurs I’ve ever met in my life.” BN