Friday, October 24, 2008

Why You Have Bankruptcy Clauses In Contracts

STATUS: TGIF! I really enjoy writing that every Friday. I finished one contract and got ready to dive into another but alas, too many interruptions. Will have to tackle on Monday.

What’s playing on the iPod right now? GAUCHO by Steely Dan

This week I read in Publishers Weekly that Sports Publishing, LLC has filed for Chapter 11 bankruptcy.

Well, lately, just about every day I read a tidbit in Media Bistro or Shelf Awareness about a newspaper, magazine, bookstore, or what have you calling it quits.

In fact, I received an email today from a wonderful editor at Rager Media (a small independent literary house out of Ohio). He was writing to tell me that they were closing the doors.

That’s very sad news as they were doing some powerful books over there.

But all this got me thinking about bankruptcy clauses. When I heard about Sports Publishing, I immediately got out the contract file for one of my early books—CHAIR SHOTS by Bobby Heenan and Steve Anderson. This was way back in the day when I was foolish enough to take on nonfiction projects before I realized that my expertise was much more focused on fiction and the occasional memoir.

There it was on page 6—a nice bankruptcy clause highlighting how rights will revert. Today I wrote a formal letter requesting the reversion and final accounting so I have it in writing. I'm glad it's there in black and white on the contract page--which is why we have this clause in all our contracts.

But my contracts manager recently told me that she’s seeing some push-back from publishing houses wanting to eliminate the clause. (I’d have to dig a little to find out what the rationale is behind that.) Now I’m also not a corporate bankruptcy attorney so I really can’t detail the vagaries of how corporate bankruptcy unfolds. All I know is that I'd rather have the clause in that contract so rights revert—even if the courts don’t allow that to happen automatically. Good thing I have an intellectual property attorney and his firm on retainer. Looks like I'm about to learn how it works.