07 August 2015

The REAL Election: Family Christian Stores Bankruptcy Ballots

MLive reports here that the unsecured creditors of Family Christian have voted overwhelmingly in favor of its plan of liquidation. No surprise because these creditors are the book sellers who will have no customers if the business of FCS is liquidated.

But wait! Didn't I write above that the creditors had voted in favor of a plan of liquidation? Indeed, I did. The plan of FCS proposes to sell virtually the whole kit and caboodle to Richard Jackson, previous owner, largest lender, and successful bidder at the previous unsuccessful auction. Once its assets have been sold to a new Jackson-controlled entity, the proceeds will be "liquidated" by paying them to the creditors of FCS. And even though the booksellers' will have taken a huge haircut on their past claims, they will continue to business with the "new and improved" FCS in the future.

Two thoughts. First, the spokesman for FCS didn't know how the other seven classes of creditors had voted. In other words, there could be a spanner in the works if even one class of creditors voted "nay." I'm kinda' hoping at least one class votes against the plan just to see a confirmation fight.

Second, if the plan is confirmed and the sale takes place, what makes us think that even a leaner FCS will succeed in the marketplace? After all, the world of selling books and tchotchkes didn't work before and I'm not sanguine it will work any better this time around. But I could be wrong. The new incarnation of FCS will have substantially less debt than its pre-bankruptcy form so perhaps--just perhaps--it will stay afloat for years to come.

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