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.

Sign Up for Our Newsletter

Tina Pavlik

Owner of TRS since 2003

An aficionado of romance novels for many years, Tina has owned The Romance Studio since 2003 and for 20 years, has enjoyed highlighting the best books in the genre. She enjoys all aspects of marketing including writing content, book trailer design, and finding captivating new books for voracious readers. She has also written over 20 romance titles under various pen names. In another life, she writes horror and works as an extras casting assistant for TV shows and films in the North Carolina and South Carolina regions.