Tattered Cover’s Updated Financial Struggles: A Deeper Debt Crisis Unveiled

Recently, Tattered Cover, a renowned bookstore chain, revealed a more complex financial situation than previously reported. The store, which filed for voluntary bankruptcy in mid-October, presented a reorganization plan to the US Bankruptcy Court in Colorado, showing a deeper financial crisis according to Publishers Weekly.

The Escalating Financial Woes

Initially, Tattered Cover reported losing around $660,000 last year, with debts of at least $1.375 million, including payments to publishers and the Colorado State Auditor for unredeemed gift cards. However, the latest filings paint a grimmer picture. By October, they had secured debts of roughly $820,000 and unsecured claims exceeding $3.2 million. Despite a $10.5 million sales figure in 2022, they suffered a loss of about $1.2 million. The stagnation in sales since March 2020, coupled with the expansion of new stores, led to increased administrative costs.

Breakdown of Debt

The major secured creditor is Ingram, owed $233,000. The unsecured debts involve significant amounts to large publishers like PRH, Macmillan, S&S, and Ingram, totaling $1.234 million. Harper Collins is also a creditor, though for a smaller amount of $25,000. Other publishers collectively are owed around $400,000.

Interestingly, former owners Kristin Gilligan and Len Vlahos have filed claims for about $62,000, related to employment agreements. They are also owed $215,000 from the store’s sale at the end of 2020. The sale price was set at $400,000, to be paid over time.

New Owners’ Investment and Bankruptcy Provisions

Since taking over in December 2020, the new owners have injected approximately $2 million, along with a secured loan of $300,000. The debtor-in-possession bankruptcy arrangement allows for up to $1.275 million in financing.

This financial revelation indicates a more challenging path ahead for Tattered Cover as it navigates through its bankruptcy and reorganization process.