Friday, April 04, 2014

The Bare Cupboard

Not even a book?
For a time, David Poindexter tried to sell his storied publishing house, Macadam/Cage, as a going concern. The company had weathered the storms that roiled publishing, with costs rising and the reading public turning increasingly to digital editions that lack the return on investment needed to keep the doors open.

Sadly, Mr. Poindexter was ill at the time and the struggle to keep his dream alive was more than a sick man could manage. No one came forward to buy the publisher, put off perhaps by a history of missed royalty payments and a mountain of debt. Investors did not see the concern as all that going.

Macadam/Cage went into bankruptcy and creditors stood in line, palms out, hoping to recoup some fragment of the debt. A judge has just decreed that the Macadam/Cage cupboard is bare. Utterly and completely bare.

A bank account holds a few hundred dollars, against claims in the thousands. There are a few books scattered about, but books are essentially worthless. All the copies that the public wanted were sold long ago, and remainders are just that. Remainders. The scraps that are usually pulped at a cost to the publisher.

The only remaining avenue for creditors to pursue is the one that pierces the corporate veil. Former employee Dorothy Smith is suing the Poindexter estate, accusing Mr. Poindexter of shifting assets around to shield them from the auctioneer. The Macadam/Cage cupboard may be bare, Ms. Smith says, but all the goodies once stored there were packed up and shipped off to shell companies so that the Poindexters did not suffer from the unfortunate demise of their business. Mr. Poindexter might have been trying to leave something to his widow so that she would not be left destitute upon his demise, but good intentions do not trump fiduciary duty.

Tracing the money trail is a time consuming task and Ms. Smith will not have an answer any time soon. You have to wonder if her legal costs are going to eat up any money she might recover, or if she is pursuing the Poindexter estate on a matter of principle.

For the bulk of Macadam/Cage's creditors, they get nothing but a tax write-off on a bad debt. For readers who enjoyed the quality works of literary fiction that were once the glory of Macadam/Cage, another niche publisher is gone and the literary world is that much worse for it.

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