Longstanding Denver bookstore Tattered Cover filed new documents in the U.S. Bankruptcy Court for the District of Colorado on Tuesday, detailing plans to partially settle outstanding claims using money from a lender.
Tattered Cover holds nearly $3.2 million in unsecured claims that it owes to various creditors, according to the company's reorganization plan. That number includes large amounts owed to major publishers, like Simon & Schuster and Penguin Random House, as well as landlords and former employees.
One of those employees is former Tattered Cover CEO Kwame Spearman.
The former mayoral and Denver Public Schools board candidate is owed about $467,000, according to the reorganization plan. Spearman told Denverite part of the money he believes is owed to him comes from out-of-pocket expenses
"I wrote personal checks to the business that totaled around $250,000," he said. "And from the time that I wrote the checks to the Chapter 11 bankruptcy, Tattered Cover did not reimburse me for the capital that I provided to the business."
The remaining funds Spearman said he is owed have to do with "employee disputes," which he did not comment further on. The court document said Tattered Cover is reviewing Spearman's claims and can object to them.
"We haven't had a chance to really evaluate whether it's going to make it worth our while to contest those claims," said current Tattered Cover CEO Brad Dempsey. "Even if we dispute them, we do dispute them, but it may not be worth the time, effort, and energy to dispute them to have those claims rejected."
Tattered Cover secured a loan of up to $1,275,000 to help settle outstanding claims from Read Colorado LLC, a company formed recently by Dr. Leslie Rainbolt and local philanthropist Margie Gart.
Money will be released to Tattered Cover dependent on certain milestones being met.
Tattered Cover's leaders also filed paperwork asking for approval to hire Plante & Moran, PLLC, a national accounting and managing consultant firm, to aid with its restructuring.
A bankruptcy court judge still has to sign off on Tattered Cover's proposed plan, however, the business simultaneously requested an extra month to provide more details on the plan.
"Right now, after closing three stores, moving a lot of inventory around and working on staffing changes operationally, we're still in the process of turning the company inside out, and I need a little more time to make sure our numbers are realistic and also in light of what the market looks like right now," Dempsey said.
The bookstore filed for Chapter 11 bankruptcy in October 2023, closing three of its locations and laying off a portion of its workforce in the process. Former CEO Spearman and others took over the business in 2020 and attempted to stave off bankruptcy through a rapid expansion and major investment. The three stores the company closed in 2023 were part of that expansion.
Since the downsizing, Dempsey said the bookstore has been faring better. The company also enjoyed a successful holiday season.
"We actually beat our 2022 numbers for the four remaining stores in November, and we also beat our 2022 numbers in December as well, which is the most important month," he said.
