Family Christian Stores Survive Bankruptcy

In case you missed the news, last Tuesday the court approved the sale of the Family Christian Stores (FCS) to FCS Acquisitions. The new owner is basically the previous owner since Richard Jackson was part of that company too (which I have written about before-click to read).

This sale, in essence, wipes clean over $120 million in debt that the stores owed. Their $75 million in assets will be purchased for an amount between $52.4 million and $55.7 million (finally tally determined at closing).

The publishers and suppliers (vendors) who were owed money had to vote to approve the sale and they did by a vote of 162-7. These vendors will receive a small portion of what they were owed. For example, if they had inventory on consignment at the stores (which FCS technically never owned) they will receive 35 cents on the dollar. For inventory that was never a payment the vendor will recieve around 15 cents on the dollar. While not much, it is more than any vendor would have received had the stores gone into liquidation.

Will 266 current locations the FCS management says they plan to keep more than 90% of them open, so expect some closures in the near future. This is not unusual in a situation like this as many of those stores may have leases coming up for renewal or the under-performing already.

Unfortunately a bankruptcy can have a domino effect on their vendors. A week ago Friday, Gospel Light Publications, a venerable publisher of church curriculum and Vacation Bible School curriculum declared bankruptcy (read this Wall Street Journal blog for more information). One of their reasons was that FCS owed them $143,000 and that loss, coupled with other challenges, made them unable to meet their financial obligations. This means printers, designers, staff, freelancers, and other will not be paid either. Dominos continue to fall.

For those of us in the writing community (agents and their author clients) we are still in a season of seeing the impact of the FCS bankruptcy on smaller royalty income for some clients. Since the publisher wasn’t paid, the author doesn’t get paid. So far the impact has been modest for most authors since FCS had been highly selective in the titles they have carried in their stores.

I am glad this is over so you don’t have to read my blogs about it any more! Seriously, it has been difficult to watch. We never like to see financial struggles. Especially in a business we love and participate in.

My hope is that the Family Christian Stores can use this to become a powerful tool in God’s kingdom. It is a tough retail environment out there.

If not, we may have to read about this again in the future…

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