Pub Rants

Sometimes It Pays to Pay…

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STATUS: Life in the fast lane…not. Sheesh. Where has this day gone? I’ve got three more things I absolutely must do before leaving tonight.

What’s playing on the XM or iPod right now? AMERICAN PIE by Don McLean

For professional advice. Having been an agent for 8+ years, I’ve certainly dealt with interesting events in publishing. Bankruptcy is just one of them.

A couple of years ago, an independent sports publisher filed for bankruptcy to re-organize. One of the first books I sold in my agency’s infancy was impacted.

What I learned? Most publishing contracts have bankruptcy clauses and ALL of them are useless. If a company files for bankruptcy, even if your contract stipulates that rights revert automatically, the bankruptcy court sees it differently and the rights can be tied up—sometimes for years.

Luckily for my author, I was able to negotiate the rights back with the help of my IP attorney and another attorney specializing in bankruptcy.

Sometimes it pays to pay for a professional assistance when it comes to specialized events like the one I describe above. If you’re an author facing similar and going it alone (sans agent), don’t ask friends or google the web. Get the facts. And in a lot of cases, it’s information only an expert can provide so you might want to consider it.

13 Responses

  1. Lynne Connolly said:

    I was involved with a publisher that went bankrupt.
    Basically, in layperson’s terms, a writer signs her contract under state law. Bankruptcy is a federal procedure, and federal law trumps state law.
    We found our contracts seized as assets. Moreover, if the publisher has given a lot of authors their contracts back prior to filing, the bankruptcy court can seize them back.
    Very nasty. We were lucky. A publisher bought all our contracts at auction and then gave us all release letters. That was very good of them, otherwise we’d have been locked in with the courts for heaven knows how long.
    The first thing an author involved in such a mess should do is file as a creditor. Don’t get your hopes up, you won’t get any money, but it does mean that the court has to send you copies of the decisions and where they are in the case. You’re kept informed.
    Get a lawyer, maybe consider sharing the costs of a lawyer, since he’s working on the same premise. We were planning to claim in the courts that the contracts could not be considered assets unless it also went with the goodwill of the author. Without that, they were mere pieces of paper, and the author could choose to disclaim them if she wished. Even the “next look” clause could be taken care of with a deal breaker. Georgette Heyer’s “Penhallow” is a deal breaker book, so that practice has been going on for a while.
    And whoever you are, if it comes to that, the very best of luck. As much as you can, push it to the background and get on with the rest of your career somewhere else. Otherwise you could go nuts.

  2. LaylaF said:

    As a newbie, I have to admit, I never thought much about the business side of writing.

    But, thanks to your posts, and those of many other agents out there in cyber-world, I have come to appreciate its complexities.

    Thank you for always keeping us informed.

  3. Saranna DeWylde said:

    I have a question along those lines, actually.

    What if you had a contract, but the publisher was in breach of that contract, as in, no monies exchanged hands and the rights were reverted to the author. Would the court still be able to go after that contract? Or is that something they’d look at on a case by case basis?

  4. Susan Gourley/Kelley said:

    I think I was involved in the same case of a failed publisher as Lynn. Even though we eventually got our rights back, it took quite a while. Those clauses are really useless and the workings of the courts ponderous, confusing and sometimes completely without common sense.

  5. Anonymous said:

    How can a court override a contract? Easy. You can’t agree to something that’s illegal or that violates someone else’s legal rights.

    Bankruptcy laws grant certain rights to creditors. The publisher and writer can’t agree between themselves to violate a creditor’s rights. Only the creditor can sign his or her rights away.

    (Writers wouldn’t like it if two people contracted to violate the writer’s rights.)

    Are the bankruptcy laws unfair to writers? Not really.

    1. Creditors enable a publisher to run a business and pay advances to writers. Without such protections for creditors, some publishers might not even be in business.

    2. Writers know (or should know) how the various laws affect their contract, and act accordingly.