Pub Rants

If You Think A Publisher Will Be Filing…

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STATUS: First day of fall. Makes me kind of sad. I want summer to stay awhile longer.

What’s playing on the XM or iPod right now? WONDER by Natalie Merchant

…for bankruptcy, what is the best thing an author can do?

My answer? Get your rights reverted before the filing so the books aren’t tied up indefinitely by the court as non-reverted titles will be deemed assets of the company.

By the way, this is true even if you have a bankruptcy clause in your contract specifying that rights automatically revert. Bankruptcy courts don’t perceive it that way and they trump contract clause.

I also suggest you get a full accounting, if you can, of what is owed to you. You want this for several reasons: 1) if you have to file a claim as a creditor in the bankruptcy, you’ll know for how much. 2) you might be able to take the amount loss as a tax deduction (but ask a tax expert first).

9 Responses

  1. Livia said:

    I don’t know much about publishing contracts, so forgive me if this question doesn’t make sense. What grounds can the author use in this circumstances to get her rights back? I’m guessing “suspects publisher is going to go bankrupt” isn’t grounds enough?

  2. nymfaux said:

    I’m confused–I’ve heard this a couple of times–What’s the point of having a bankruptcy clause if nobody will acknowledge it? I mean, I’m guessing it’s important so that you’ll eventually be able show proof of ownership–It just seems like the clause should avert all the hassle in the first place…

  3. M.J.A. Ware said:

    It says much about the state of the industry to see so many blog posts and articles about publishers going out of business or having lots of financial difficulties.

    I guess it’s like that everywhere right now; but worse in publishing.

  4. lynnet said:

    I’m taking a bankruptcy class right now, so these posts on bankruptcy are really interesting.

    nymfaux- the clauses are generally put in for one of three reasons- they’re either standard and no one has bothered to take them out of the form, one party knows they aren’t enforceable, but for whatever reason wants to mislead the other party, or neither party knows they aren’t enforceable. There might be other reasons, but those are the main ones I can think of.

    Bankruptcy tends be a specialized area, and nonbankruptcy lawyers often don’t have any background it it.

  5. Suzan Harden said:

    Something else to remember–any reversions made within a certain time period before the publisher’s bankruptcy filing are deemed void by the bankruptcy court. It used to be six months, but please check with an attorney.

    What this means is if the publisher signs the rights back to the author the week before they file, the court looks at it as an attempt by the publisher to defraud his other creditors.