TORONTO — Canada’s largest book distributor, H.B. Fenn and Company Ltd., announced Thursday that it plans to file a proposal under the Bankruptcy and Insolvency Act.
In a brief statement, the company said it has “encountered significant financial challenges due to the loss of distribution lines, shrinking margins and the significant shift to e-books, all of which have significantly reduced the company’s revenues.”
“We have worked extremely hard to build the company and keep it going even under today’s adverse conditions,” said founder and CEO Harold Fenn. “My heart goes out to our over 125 employees and to the many publishers we represent, as well as the customers that have supported us over the years.”
Lawyer D.J. Miller, of the Toronto-based restructuring and litigation firm Thornton Grout Finnigan, said the move does not necessarily mean H.B. Fenn is headed for bankruptcy. Instead, she said, the proposal could be a way for the company to begin restructuring its business.
“They’re telegraphing to the world that they’re going to be putting out a proposal that outlines what the terms of the restructuring will be, which will be voted on by creditors,” Miller said.
“The purpose of the proposal will be to compromise the existing debt and allow the company to move forward with less debt.”
During the initial court process triggered by the notice, H.B. Fenn can continue to operate without interference from creditors. The company will have to provide a cash-flow statement and file a proposal to creditors within 30 days, unless an extension is granted by the courts.
H.B. Fenn owns Key Porter Books, which temporarily suspended publishing operations last month. The company said it was exploring a “number of restructuring options.”
Last September, Key Porter had to lay off almost two-thirds of its staff but staff denied reports the company was going bankrupt.
Key Porter, which has represented authors including Margaret Atwood, Joan Barfoot, Conrad Black and Farley Mowat, has published about 100 titles per year and has over 500 books in print.
A spokesman at H.B. Fenn could not immediately be reached for comment.