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LPC Group Files Chapter 11 - Publisher Payments Frozen
As They Await Hearing, Independent Publishers Look to Reclaim Frozen Money
LPC filed for bankruptcy in April after American National Bank called in a longstanding loan. The action left client publishers, many of them cash-strapped, confused about their futures.Now American National Bank and parent company Bank One have filed a formal claim in Connecticut bankruptcy court, claiming ownership of $1.2 million in cash receipts earmarked for the publisher clients of LPC. The money had been frozen by the bank's lien earlier this month.
David Wilk, president of LPC, and his publisher clients counter that the bulk of the money, about 75%, doesn't belong to LPC but represents the sales of books consigned to LPC to distribute. The attorney for Common Courage Press, a member of the creditors committee, says that publishers should be confident that they will ultimately regain control of that 75% stake.
The case could turn on whether the bank knew the books in question were consigned goods. If it did, the publishers would ostensibly have a strong argument that the money belongs to them. As part of that debate, the bank is claiming that LPC's publisher clients did not file a document under the state's uniform commercial code that formally notifies creditors that their books were on consignment. But the publishers claim that such a filing was not required.
Attorney Tracey Saxe, who has been involved in a similar case in the past, remains optimistic. In that case, Saxe represented a group of small independent publishers whose books and receipts were seized when Key Book Services, a Connecticut warehouse, filed for bankruptcy in July 1989. A Connecticut judge ruled that the books and cash receipts seized were the property of the publishers. Saxe says that "It's the same kind of case" and that because LPC never owned these books or the proceeds, it can't really transfer them, which means the proceeds are owed to the publishers. Saxe says that the bank knew all along that the seized receipts were from consigned goods.
Wilk declined to give details of the negotiations with American National Bank. "It's still too early. The issues are complicated and there are a lot of lawyers involved. I prefer to remain vague and positive." He did say that LPC continues to ship books ("ironically April will be one of our best months") and said that the bank has agreed not to seize payments for titles received after LPC's filing.-