High Finance, Part I

So on Friday the 8th, I get a call from a company identified as Epiq Systems asking for my fax number so they can send over some documents related to a bankruptcy. Now, that's not the kind of call you get every day, and they won't tell me whose bankruptcy they have in mind.

It turns out when papers start to come on Monday to be that of a company called Haights Cross Communication, which is the parent company of the prominent long-time audio publisher Recorded Books. Which publishes Charlaine Harris, Brandon Sanderson, Kat Richardson and Peter V. Brett from the JABberwocky list, and you can figure with authors like that, there are some royalties Recorded owes me.

But the bankruptcy is actually a good thing. I think.

Haights Cross took on too heavy a debt load four or five years ago, as many people and places did. Unlike many of them, they were able to enter negotiations with their major lendors and come to an agreement, announced in September, for a debt-for-equity swap involving a significant haircut for the lendors, with the intention to file for a pre-packaged bankruptcy petition and to continue doing business as usual all the way through. Motion 8 is for an Order Authorizing the Debtors to Pay Prepetition Claims of Trade Creditors [I think that's me] in the Ordinary Course of Business.

So as bankruptcies go...

But the interesting thing is all of the things that come out of the woodwork.

Even before the official Notice of Filing for which Epiq needed my fax number -- and there Epiq is, Motion 9 of the First Day Motions, Docket No. 11, authorizing retention of Epiq as the Claims and Noticing Agent -- I get a fax from a credit arbitrage company called Credit Liquidity, LP, which is offering to buy out my claim for 74.6 cents on the dollar. First Come, First Served, Must Respond by January 15. Why, if you didn't read the documents carefully, you'd think this was an official communication. The fax cover sheet blares in very big letters "LEGAL DOCUMENT REGARDING HAIGHTS CROSS COMMUNICATIONS BANKRUPTCY."

If you get around to reading the FAQ, they do hide in question #4 that CL is not related in any way to the company. They also have enough caveats in the FAQ to hide a very large emptor. They'll pay my 74.6 cents "unless issues develop in the bankrupty court proceedings which ay delay us in processing the claim or purchasing the claim." They "may not purchase the claim ... due to ... specific case issues, litigation or other perceived problems with the bankruptcy proceedings."

Which is to say that if you don't look carefully, you can give Creditor Liquidity a quick profit as they pay 74.6 cents in a two or three weeks and then get paid a dollar in two or three months, but if anything happens where it looks like the pre-packaged bankruptcy proceeding won't actually result in business as usual, they'll back away from their offer. Quickly.

Then on Tuesday, it's an attorney in a Florida affiliate of my accounting firm that wants to invite me to throw my hat into the ring for serving on the Creditor Committee.

In a contentious bankruptcy, this group of creditors with their own counsel and experts and staff all paid for by the debtor company as part of the proceeding, would keep an eye on things and represent the interests of the creditors. Because US bankruptcy law gives current management the first shot at reorganizing the company, this is a little weight on the other side of the scale to be sure they aren't doing things that help themselves more than the people who hope to get some recovery out of the bankruptcy proceeding.

But the call from the attorney isn't about me. Rather, if I volunteer and am chosen -- well, I'll need to have somebody actually looking after my interests because I'm not going to head off to Wilmington for every hearing, and those billable hours are a court-protected cost out of the debtor's pocket.

So it's nice to be wanted. I would certainly volunteer, because JABberwocky does have a decent amount listed as owed in the filings, I'm as good an agent as any to speak up for agents that are owed money on this (Scovil Galen Ghosh is one of a handful of others with solid amounts listed). It would be an interesting experience to be part of the process, maybe even more interesting than jury duty. So there's more to be gained experientially from this than from selling my claim for 74.6 cents on the dollar, but let's be clear that isn't about me.

How I Spent My Vacation From Blogging

OK, so it's been 4 weeks since my last post, and I'm not happy about that, but...

Business comes first, and November kind of got to be one of those months.

Shortly after my last post I headed down to DC to spend some quality time with Brandon Sanderson.  Brandon and I have spent fall quality time in DC for each of the last 3 years, and I've got to say it's pretty amazing to see how things have been coming along for Brandon over that time.  In years past we pretty much spent our time doing drive-by visits to bookstores to sign shelf stock and say "hello."  This was somewhat helpful in 2006, and it was possible to see Brandon's market share in DC increase in 2007 for the ELANTRIS and MISTBORN paperbacks, almost certainly as a direct result of those efforts.  In 2007, we visited just after the announcement of Brandon's work on the Wheel of Time series, and we had press releases to hand out.  We handed out enough that we had to stop at the Fed Ex Kinko's in Manassas to run off some more.  This year, we would go into stores like the B&N, Borders Express and Borders in Springfield, VA or the Borders Express in the Landmark Mall and we would find staff who remembered the visit from last year and were excited to see Brandon again or who had put him up on a staff rec or were happily hand-selling his work.  It was totally inspiring to see.  Brandon also had a great crowd for his signing at the Borders in Bailey's Crossroads, VA, which is a kind of special store in the DC area that Borders reserves for major author events.  I also watched Brandon keep two rooms full of high school students entertained with presentations, and t hat takes a real gift.  We also joined Tor's sales rep for the area for dinner with some of the people from DC's Politics and Prose, which is one of those really good indie bookstores that actually has a science fiction section with some people who pay attention to it.  If only they were a little closer to the Metro...

I raced back from DC the following Tuesday morning and made a cameo appearance in the office before heading to a dinner with the publisher of Recorded Books to celebrate the success of their unabridged audio Charlaine Harris publication program.  This was a really nice dinner at the Gotham Bar & Grill.  I'd never been, but it's a standby in NYC very highly rated in Zagat's and deservedly so.  It's a nice space, with excellent service, and really good food, and I'm glad I wasn't paying.  I may have to go at lunch when they have a prix fixe menu.

That left me two days in the office before I spent Friday and Saturday enjoying more quality time with Brandon on the NY stop of his tour.  This included a visit to Tor where I was recruited unexpectedly to appear in a wonderful video, after which Brandon pitched an idea for a new fantasy series to Tor's patriarch, Tom Doherty, and then Tom took Brandon and I to a nice Italian restaurant a couple blocks away where I tried some bitters.  Brandon's fall Tor concluded with his first NYC signing at the Barnes & Noble in Greenwich Village, which was another great turnout, and then we visited some more bookstores on Saturday, including the B&N in Park Slope, Brooklyn, where Lisa had put Brandon's MISTBORN on a staff rec earlier in the year and was quite pleased to be able to meet Brandon in person.

Brandon isn't my only client, so after spending the better part of a week with Brandon, the week of the 17th was very busy at the office as I tried to give quality time to other clients and other matters requiring my attention, and then no sooner was that week over then it got to be  November 24 with the annual SFWA NYC reception.  I've been going to the SFWA reception every year since 1986 when I was a newbie agent who knewbied nobody, while it was the first visit for my associate Eddie Schneider and our intern Katherine.  

The next morning I was on an early train to Connecticut to begin my Thanksgiving holiday.  It was nice to have some extended time away from the office, and if I didn't get quite as much reading done as I had hoped, I did get to see Bolt with my nephews and play some Boggle and Frisbee and Monopoly and have a nice Thanksgiving dinner at one brother's and a nice Shabbat dinner at another's with time to visit some of the bookstores in the Hartford area.  One of the booksellers at the B&N in West Hartford had a staff rec for Tanya Huff.  

So it was a busy November.  

And it's just busy times at JABberwocky.  I feel a little bit guilty because I'm fortunate to have things going very well at the agency right now.  Brandon Sanderson, as above, is doing wonderfully.  Charlaine Harris and her Sookie Stackhouse books have skyrocketed in sales following True Blood more than any of us would have imagined.  All thanks go to Alan Ball for his great TV show.  But the TV show can get people to sample DEAD UNTIL DARK.  It's the books themselves that get so many of those people to decide to read the entire Sookie Stackhouse series, and it's a tribute to a really wonderful person in Charlaine Harris who's written a lot of really wonderful books that's made the  Sookie boxed set the #1-selling boxed set in the country the past three weeks.  Peter Brett continues to build ahead of his US launch for The Warded Man in March.  The one manuscript I did read over Thanksgiving was a new Paksenarrion novel by Elizabeth Moon, and it's so exciting to be back in that world 22 years after I first read the original Paks trilogy. Tobias Buckell is my latest NY Times bestseller (#4 trade paperback fiction) for his HALO: THE COLE PROTOCOL.   All this is happening here at a time when the economy as a whole is not in good shape, and publishing had a kind of Black Wednesday today with major cutbacks at Random House, S&S, Nelson, Houghton Mifflin/Harcourt, with steep drops in same store sales at B&N, Borders and Books a Million, and other grim things aplenty.  JABBerwocky isn't immune to all of this.  Looking over my Nielsen Bookscan #s, you can see a lot of books by a lot of my clients that dropped by 30% or 50% in their weekly sales numbers all of a sudden and very quickly in September and have since been establishing new and dramatically lower sales levels.  But I had more to be thankful for this Thanksgiving than some other people, and it's hard not to feel guilty.

On some of those lower sales figures...  I don't envy the management of the bookstore chains right now who have some difficult issues to contend with.  Sales are falling, so you want to reduce inventory levels.  Now what do you do in early 2009 when you're planning after a difficult holiday season, and you have book #1 in a series by an established and popular author who is nonetheless being impacted by the economic climate?  If you use the same formulas to determine stock levels now that you did a year or 18 months ago, that may mean this book #1 is below the cut-off for being carried at some or all of your stores, and back it goes to the publisher, and there's logic to that.  But there's also a risk, because you're now making it harder to sell the next books in the series, and you're making a hole in your selection that might make your store less attractive as the customers start to return in the months to come, and let us all hope that 2009 will see some better times.  It becomes very challenging to figure out how to stay alive today without doing lasting harm to your future succes.  The decisions people make in Ann Arbor and NYC on questions like those will have a big impact for years to come on the big chains and on some of my clients.  And as good as things are going today, I do worry a bit about that.

One controversy I didn't chip in on in the blogging world...  My client Tobias Buckell did some posting on how the various chains were treating his new books.  You can read his 2nd generation post on the subject here.   (and find links in that post to some others by other authors.)  Blogger extraordinaire Andy Wheeler chipped in a few weeks later with a very insightful post.  You had calls for a boycott of Borders because Borders wasn't ordering every sf book by every author.  Yikes!  If there's one thing I pray for, it's that both Borders and B&N come through the difficult retail times we're in right now and survive and thrive in the future.  If you have a complaint about the world of bookselling today, you'll have many many more if there aren't two major chains around.  Simply put, both chains will sometimes do odd and inexplicable things, but they rarely do them at the same time with the same author, and if ever we don't have both to kick around it will be a very bad day.  Some examples:  Borders carries Elizabeth Moon's Deed of Paksenarrion omnibus which B&N does not, while B&N carries the trade paperback readers group edition of Elizabeth's The Speed of Dark, which Borders does not.  Borders might have skipped Tobias Buckell's Sly Mongoose, but as he has his success with Halo there are no B&N stores that are supposed to have his Ragamuffin paperback corporately speaking, while the book is being carried at the better f&sf locations for Borders.  Prior to the release of True Blood, B&N was more supportive over the years in terms of backlist risers and the like for the Sookie Stackhouse books, but after True Blood debuted it was Borders that took a more aggresive position on the Sookie books while the B&N mystery buyer was showering floor displays on Charlaine's non-Sookie books.  Borders has been much better than B&N to the Goblin books by Jim C. Hines, yet B&N has a more aggresive order in place for Jim's forthcoming novel The Stepsister Scheme.  B&N has done much better with the Greywalker novels by Kat Richardson, but Borders is currently better inventoried with Brandon Sanderson's Well of Ascension.  I could go on and on.

Now the success of the business is hitting my reading pile hardest.  The summer, the pile hardly budged at all.  In the past few months I've at least been making some progress, though after a stretch of time when few of my established clients were turning in new books, I'm now starting to get several of those that have to get put at the top of the pile which makes the other people have to wait that much longer.  That's perhaps the biggest obstacle to my blogging, that the hours I spend on this are hours I'm not spending reading manuscripts by authors who are waiting very patiently.  Still, I hope to find a little more time in December to tend to the Brillig Blogger.   But I promise I am trying as hard as I can while still having a life outside of work of some sort to get through my reading pile.  

Enough for now; I will try and have some movie reviews up over the next several days.