Family Christian Stores Stay Open, But Gospel Light Files for Bankruptcy
From Christianity Today:
The nation’s largest Christian retail chain will remain open after a bankruptcy judge approved the sale of the troubled company today.
After six months of wrangling in bankruptcy court, Grand Rapids-based Family Christian Stores will be sold debt-free to FCS Acquisitions for between $52.4 and $55.7 million, according to MLive.
The move will cost creditors millions of dollars but will keep more than 200 bookstores open as venues for publishers and vendors to sell products in the future.
The plan was approved by Judge John Gregg Tuesday morning…
…Family Christian—which will be renamed FCO, LLC—was able to shed more than $127 million in debt.
On Friday, Family Christian Stores’ creditors, many of them Christian publishers and vendors, voted 162 to 7 in favor of the sale. According to court records, Family Christian owed about $108 million to the creditors who approved of the sale. It owed about $97,000 to the creditors who opposed the sale.
The sale will preserve Family Christian’s business for now…
But there are casualties:
“For the short term they will be healthy. And if they can adapt to the retail challenges ahead they may be successful,” Christian literary agent Steve Laube told CT in an email. “Unfortunately, their financial ‘health’ came at the expense of a number of publishers, suppliers, and authors.”
Because of the sale, Family Christian’s suppliers will have to cope with being paid cents on the dollar for products they had shipped to the retailer.
Gospel Light Publishing, which sells Sunday school and Vacation Bible School curriculum through Family Christian, filed for bankruptcy last Friday, the same day that creditors voted overwhelmingly to keep Family Christian in business.
“It was a contributing factor in our need to seek court protection,” Gospel Light CEO Dave Thornton told CT. “We had to write off $143,000 in expected income, and we’re a smaller, family-owned Christian publishing company that didn’t have deep enough pockets to sustain that, combined with other unexpected losses this spring.”
In Family Christian’s backyard, Kregel Publishing is taking a big hit. MLive (Michigan Live) reports:
Jerry Kregel, executive vice president and chief financial officers of Grand Rapids-based Kregel Publishing, said the bankruptcy will cost his Christian publishing company about $400,000.
As one of Family Christian Stores’ consignment vendors, Kregel’s family- owned company will get 35 percent of the wholesale value of their products as a result of the sale, he said.
Despite their losses, Kregel said they voted for the sale in hopes of keeping Family Christian Stores open despite the challenges “brick and mortar” stores are facing from online and digital competitors in the publishing industry.
Christian book and gift stores continue to face challenges, said Kregel, who company also operates a retail store in Grandville and recently closed a store in Plainfield Township.
“In an industry that has been challenged in recent years, this squeezes things even more,” he said.