The news that the iconic, independent bookstore Tattered Cover, run for decades by Joyce Meskis, was set to be sold to Barnes and Noble raised many eyebrows. Would Tattered Cover become like bookstores at the mall? So I asked Steven Silvers, the spokesperson for Tattered Cover, how is it that an organization that has such valuable name recognition sold for less than the cost of many houses in Denver? How was Barnes and Noble able to acquire it for such a small amount? His response is today’s Voices section.Â
Vicky,
First off, you need to adjust your context. It’s more accurate to refer to Tattered Cover not as an organization but as a company. It’s a classic [Small and Midsize Business].
Tattered Cover has been losing money for many years. There are a lot of reasons for this: Amazon, ebooks, increased costs across the board, COVID, wholesale changes in buying habits and many others.
A few years ago, management decided the way to address declining sales was to expand into new expensive stores, including one in Colorado Springs. Overhead went through the roof. Sales did not.
By the time Brad Dempsey was brought in by the board of directors to figure out what could be done, Tattered Cover was damn close to insolvent. It was very, very close to going out of business for good.
Venerable institution or not… Publishers had all but quit on Tattered Cover, demanding cash on delivery. The company had no credit with any of them. Same with the other vendors.
Tattered Cover was out of cash to pay employees or buy books.
In October it was decided that the only way to save Tattered Cover was through voluntary Chapter 11 reorganization. We were able to secure a Debtor in Possession (DIP) lender to provide barely enough cash to operate while we took measures to consolidate operations, renew marketing and author events, and look for a long-term solution.
It was clear this was to find new owners.
We had a lot of interest in the company. A lot of that interest disappeared, however, after they got into our numbers. This was still going to be a company that needs considerable infusions of resources.
When the qualified bids were delivered to the bankruptcy court, all but one of them provided far less cash than was needed to pay secured creditors, past-due rents and the like.
All but one of the bids wanted to keep all the stores and employees. The other bids wanted to close stores or liquidate the company altogether.
Barnes & Noble showed a commitment to Tattered Cover, keeping all stores and employees. It was the best decision for Tattered Cover not only to get out of bankruptcy once and for all, but to finally thrive again as the iconic bookstore it is.
As for the amount of the bid… No buyer, including Barnes & Noble, is going to pay a premium for a bankrupt business, no matter how storied the brand name.
That’s why the bid was what it is: Enough to pay off the secured creditors, bring the landlords current and provide the cash necessary to operate in the immediate future while working out what long-term resources are needed.
Barnes & Noble will provide Tattered Cover with the resources for the long game to maintain its culture, identity and service to the communities it serves, as well as continue our advocacy for First Amendment issues.
The green carpet and old furniture isn’t going anywhere.
Hope this helps.
Steve
According to Silvers, the $1.83 million agreement still needs to be approved by the court. The Colfax, Union Station, Aspen Grove and Stanley Marketplace stores will stay open, the staff mostly intact. There will be no changes to the airport store which is licensed by Hudson Books. And for those who are concerned that the bookstore will lose its character and devotion to the First Amendment, Steve assures it is not so.
“We believe Barnes and Noble is sincere about letting Tattered Cover operate as Tattered Cover and will give us the resources to continue the vision that Joyce started.”
