Updated October 23, 2024
Since May 2024, CLMP has been working with law firm Perkins Coie, which has advised us on SPD’s dissolution process. The below overview represents our current understanding of the situation. We also encourage interested parties to read the recent Publishers Weekly article covering the latest dissolution news. CLMP will continue to monitor the situation, update this web page, and advise publishers as best as we can throughout this process.
On April 10, 2024, the law firm representing SPD, Tovella Dowling, sent letters to publishers and other creditors notifying them of SPD’s forthcoming dissolution and the process of filing claims, setting a tentative deadline of August 8. This deadline for submitting claims was ultimately extended by the court until October 10. In May 2024, SPD sent sales statements to many of its publishers. However, CLMP has heard from many publishers that not all presses distributed by SPD received these letters or sales statements. We have also been told that the sales statements presses received included minimal information and often appeared incomplete or even incorrect.
In addition to filing claims with SPD’s attorneys, publishers could also file complaints with the California Attorney General’s Office. (It’s our understanding that publishers can still file complaints if interested. Information about how to do so can be found here.)
Over the past several months, publishers have been receiving response letters from Tovella Dowling, either accepting, partially rejecting, or fully rejecting their claims. If claims were rejected, partially or wholly, it was based on “a discrepancy between the claim amount and the internal records of Small Press Distribution.”
On July 16, 2024, SPD submitted an initial filing for dissolution to the Superior Court of Alameda County, and it was assigned case number 24CV083602. This filing requests that SPD’s dissolution and all outstanding claims be managed by the court. A copy of the full initial filing can be attained for a $25 fee from the Superior Court of Alameda County Public Portal. At the court’s website, you can create a new account, perform case searches using the case number above, and purchase and download case documents.
The filing is not final, but it includes a “high-level overview” of SPD’s financial position as of April 30, 2024.
SPD DISSOLUTION INITIAL FILING TAKEAWAYS
- The filing states that “SPD has limited assets.” As of April 30, SPD’s cash balance was just over $73,000 and SPD estimated $114,000 in accounts receivable.
- SPD also has “extensive liabilities.” An updated list of liabilities will become available in the final plan of dissolution, but the initial filing shows SPD has outstanding debts of at least $342,900, “as a result of, among other things, loss of funding and declining sales.”
- SPD has outstanding balances with at least 163 publishers who are due a total of more than $316,000, in amounts ranging from $5 to $34,000.
- The filing acknowledges that the balance could be higher but noted SPD does not have the ability to estimate additional balances because its tracking system of sales and returns was discontinued.
- The filing states that in 2023 SPD saw donations fall by $125,000 from previous levels. It states that the shortfall came after SPD’s revenue had declined during the pandemic, and the company was only able to continue operating after receiving funds through the Small Business Administration Paycheck Protection Program, which allowed staff to be retained. SPD also received a separate $150,000 SBA loan to help build back its operations, for which it still owes over $144,000. In addition, the filings show SPD owes 58 other vendors “at least” a total of $26,000, and that its last executive director, Kent Watson, has filed a claim for $104,000 that he says he is owed under his employment contract. A former SPD employee also filed a wage claim in 2020 that is still pending.
- Given all SPD’s financial challenges, the filing states that SPD had no alternative other than to dissolve its business with judicial supervision.
In communicating with publishers directly about SPD’s practices, and in hearing many of the same issues and concerns, CLMP decided to file a complaint with the California Attorney General’s Office, providing summarizing information that we’ve gathered from our surveys and communications with publishers about the impact SPD’s closure has had. We wanted to make sure the Attorney General understood the devastating consequences of SPD’s closure for small presses and emphasize why this case in particular was worthy of their time and attention. Our advocacy has been successful in raising the visibility of SPD’s closure with the AG, which appears fully engaged and is receiving all filings, motions, and decisions in the SPD case.
Two hearings have been scheduled so far for 2024: one on October 3 and another on December 2. At the October 3 hearing, the Superior Court of Alameda County approved SPD’s request to consolidate all claims before the court and enjoin creditors and others from filing separate claims. And on December 2, there will be a case management conference, which we’ve been told is largely administrative.
It appears that the dissolution process won’t be completed until 2025. Additionally, due to SPD’s minimal remaining assets, it doesn’t seem likely that creditors will collect much of what is owed to them. It remains to be seen, but we believe that if publishers do receive any compensation, it will be pennies on the dollar.
