H.B. Fenn declares bankruptcy facing $25 million in liabilities
H.B. Fenn and Company has officially declared bankruptcy after filing a notice of intention earlier this month. On Friday, the Bolton, Ontario–based distributor filed a voluntary assignment into bankruptcy under the Bankruptcy and Insolvency Act, erasing any hope – however slight – the company might successfully restructure.
Financial details included in the document offer a dire portrait of the troubled firm, which lost its biggest account two years ago when Hachette Book Group began shipping direct to major retailers. According to a statement of affairs filed with the Office of the Superintendent of Bankruptcy Canada, H.B. Fenn’s liabilities total $25 million, with $21.8 million owing to unsecured creditors. Total assets are estimated at $14.8 million, translating to a shortfall of $10.2 million.
By far the biggest unsecured debt is the $10 million owed Macmillan (listed in the filing as Holtzbrinck Publishers Holding), H.B. Fenn’s largest remaining publisher client. (Macmillan’s U.K. arm is owed an additional $600,000.)
According to former H.B. Fenn staffers contacted by Q&Q, Macmillan was preparing to follow Hachette in shipping direct to major Canadian retailers, with the changes to take effect April 1. H.B. Fenn senior management was informed of the changes before the company entered bankruptcy protection Feb. 3.
Macmillan CEO John Sargent would not comment on the matter earlier this month. Macmillan has since told Canadian booksellers to source from U.S. distributor Ingram while it establishes alternative distribution in Canada.
After Macmillan, the largest unsecured creditor is a bloc of H.B. Fenn–affiliated companies comprising Fenn Publishing, Fenn Technologies, and two numbered corporations bearing H.B. Fenn’s Bolton address; in total, the four companies are owed $4.1 million. (Key Porter Books, of which H.B. Fenn was the controlling shareholder, is not listed as a creditor.) HarperCollins U.S., the U.S. distributor of H.B. Fenn publisher clients Hyperion Books for Children and Disney, is owed $3.3 million.
Among Canadian firms, the hardest hit are Vancouver’s Whitecap Books (owed $1.4 million) and the Canadian arm of Oxford University Press ($420,000). Other unsecured Canadian publisher clients include Mary-Ann Kirkby’s Saskatchewan self-publishing venture I Am Hutterite Inc. ($24,000), Calgary technical publisher P.S. Knight Co. ($19,000), and Cogito Media ($18,000), the latest publishing venture by Quebec’s Pierre Turgeon.
The largest secure creditor, Hachette, which continued to use H.B. Fenn for sales to library and independent accounts, is due outstanding debts of $2.7 million. The only other secured creditor is H.B. Fenn founder and chairman Harold Fenn, who is owed $500,000. According to the filing, H.B. Fenn had settled all outstanding debts with its bank, Toronto Dominion, before filing for bankruptcy.
A representative from H.B. Fenn’s bankruptcy trustee, Grant Thornton, did not respond to requests for comment Monday. However, according to an H.B. Fenn creditor, the trustee has yet to hold formal meetings for creditors seeking to retrieve their inventory.
Correction: This original version of this story incorrectly identified the Canadian distributor of Hyperion, which is distributed in Canada by HarperCollins Canada.