Children’s book publisher Albert Whitman & Company has published an amended Plan of Reorganization in its bankruptcy case. It is a typical plan for a Chapter 11 Subchapter V bankruptcy, in that it uses future projected disposable income to pay a portion of their unsecured debt to creditors (including the authors who are owed royalties) for the five-year period after the plan is confirmed, while also allowing current equity holders to retain their equity interest in the company.

The projected disposable income for the five-year period according to the plan is $1,320,751. Unsecured creditors will get their pro rata share of that amount paid quarterly through June 2031. The projected recovery for unsecured creditors is 40% of their claim. However, authors should note that recovery depends on a number of factors including whether the projected disposable income is more or less than projected and the ultimate amount of allowed unsecured claims, meaning that their actual recovery could wind up being more or less than 40%.  

Creditors, including all authors owed money, can vote for or against the plan and should have received their ballots at this time. Ballots are due March 16^th. Keep in mind that even if most creditors vote against it, the Court can still confirm the plan if certain factors are established such as whether creditors are slated to receive more as part of the plan than they would in a liquidation. As such, the chances are high that the plan will be confirmed regardless of how the creditors vote.

Checks will be sent to creditors at the address set forth in their proof of claim (if filed), any notice filed with the court changing a creditor’s address or the address set forth in the Debtor’s Schedules if no proof of claim was filed. If a distribution check is returned as being undeliverable, it will be held for 90 days. If a better address is not provided within those 90 days, the distribution check will be forfeited along with any right to future distributions. Therefore, creditors should keep the Debtor informed of a current address through June 2031.

Note that if you are an author who filed a proof of claim, your claim will automatically move forward, provided Albert Whitman agrees with the claim as filed and amounts reflected on it. If Whitman does not agree with your claim, it may file an objection, at which point both Whitman and the author will need to provide evidence to the court regarding the claim. If the dispute cannot be resolved between the parties, the court will rule on the dispute. If you are an author who did not receive the legally required notice from Albert Whitman to file a proof of claim, we urge you to contact Albert Whitman’s attorney, William Factor at wfactor@wfactorlaw.com and Bankruptcy Trustee Robert Handler at rhandler@com-rec.com with a request to file a late claim. You may also intervene in the case with your own counsel (we can provide referrals if you need representation).

If you have any questions or need any further assistance, please contact us by submitting a legal help request form or emailing staff@authorsguild.org. Please note that the Guild can only provide legal assistance to member authors and illustrators