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| Tattered Cover, Westminster | |
The Tattered Cover Book Store filed for Chapter 11 bankruptcy protection yesterday and will close three locations by November, including the McGregor Square store and outlets in Westminster and Colorado Springs, all opened between 2020 and 2022. At least 27 of the company's 103 employees will be let go.
"This structure of seven stores is not sustainable," Tattered Cover CEO Brad Dempsey, a Denver bankruptcy attorney, told the Denver Post. "It's very difficult to be profitable without a substantial amount of additional capital that investors were not willing to provide right now."
Once approved by the court, the Chapter 11 filing will give the company access to $1 million in special financing from some existing investors and board members, who will constitute a new ownership entity led by current investors and board members Leslie Rainbolt and Margie Gart. That money will be used to obtain books in time for the 2023 holiday season.
Store closures are expected to begin next week. Some of the affected staff from these locations may fill temporary seasonal positions at the remaining four stores during the holiday season. The company said severance packages will be provided. The Tattered Cover's Denver International Airport stores will continue to operate as part of the licensing agreement with Hudson Booksellers.
"Our employees are part of what makes Tattered Cover special," Dempsey said. "It's really hard to do this. These people are dedicated booksellers; they are community builders; they're terrific people. I wish we didn't have to make this decision, but it's in the best interest of the company."
Documents filed in the U.S. Bankruptcy Court for the District of Colorado show Tattered Cover was more than $660,000 in the red between January and September. The business owes more than $1 million to publishers, as well as more than $375,000 to Colorado's Office of the State Auditor for abandoned gift cards, filings show.
Dempsey said that when he became CEO in July, he had some idea of the company's economic woes: "I discovered the range of issues, the breadth and scope of the issues, were deeper and wider than I had originally understood."
Tattered Cover remains on a credit hold with most publishers, Dempsey added. This month, he flew to New York to meet with senior management at the five major publishing houses to negotiate terms. They advised closing stores to focus on quality over quantity. "We just can't afford a 45,000-square-foot footprint," he said.