After 2 centuries of being in the industry and having published writers from Mark Twain to J.R.R.Tolkien the great bookstore chain has finally filed bankruptcy. More than 20 affiliates also filed bankruptcy including Broderbund LLC and Classroom Connect Inc. The company had acquired debts to the tune of over $3.1 billion which the leaders agreed to settle through bankruptcy. With this pre-packaged bankruptcy deal the control of the company would go into the hands of the lenders. Operations would continue as normal under the protection of bankruptcy till the proceedings are concluded, predicted to be at the end of June. The move comes as no surprise in the market as earlier in the month the chain had announced their intention to organise under a prepackaged bankruptcy deal. Such plans are made earlier on with lenders and shareholders to speed up the process.
The Boston based company had been struggling with its finances for the last few years. It was severely hit by the economic crisis and consequent global meltdown. In 2007 the company acquired Harcourt education for roughly $4 billion which made it one of the top sellers of school books from Kindergarten through grade 12. However with the economic crisis, cash strapped state governments deferred and cancelled education related purchases and thus there was a smaller market for school books. Additionally the sales market of paperbacks and hard covers have taken a serious beating from the competition with e-books and have lost much of their market share. In this scenario compounded with mounting debts the only solution was to file for bankruptcy. They filed bankruptcy under chapter 11 in the US Bankruptcy Court for the southern district of New York. They said that their plan is supported by the vast majority of their stakeholders and will help strengthen their financial position to fact the future better. Houghton Mifflin is not the only publisher in the recent past to have gone into bankruptcy. February last year saw the second largest the US based bookstore chain BORDERS Inc. filing bankruptcy.