May 14, 2012
Houghton Mifflin Harcourt — publisher of giants and front for Amazon — declares bankruptcy
by Dennis Johnson
Houghton Mifflin Harcourt — the company that publishes Philip Roth, Jonathan Safran Foer, J.R.R. Tolkien, all the Curious George books, and provides a false front for books from Amazon.com, published under HMH’s “New Harvest” imprint — revealed on Friday thatit had cut a deal with its creditors to enter into Chapter 11 bankruptcy in return for wiping out $3.1 in debt and turning it into equity in the company.
According to a New York Times report by Julie Bosman, the company says the move will allow it to “lift heavy interest payment obligations without the need for cutbacks.”
As Bosman observes, “The publisher has struggled financially for years, laden with debt that was taken on when Education Media and Publishing Group, an Irish private-equity concern, borrowed heavily to finance the acquisitions of Houghton Mifflin in 2006 and Harcourt in 2007.”
A Publishers Weekly report by Jim Milliot says,
In a letter to employees, CEO Linda Zecher said there are no plans for layoffs and that vendors and suppliers will be paid in full. “This process will have no impact on our day-to-day operations. We will continue normal business operations, now and throughout the process. We expect there will be no disruption to our relationships with our employees, customers, business partners, suppliers or vendors,” Zecher wrote.
Bosman’s report says that means “Employees will be paid as usual, there are no plans for layoffs and the company has more than $135 million in cash on hand to pay for operating costs,” according to Zecher. The email from Zecher adds, “By converting our existing long-term debt to equity, we will put HMH in a much stronger financial position for the future.”
Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him on Twitter at @mobylives