After filing for bankruptcy last October and revealing a partial financial plan in January, the Tattered Cover submitted a full proposal Thursday to reverse its fiscal fortunes.
In its bankruptcy proceedings, the longstanding Denver bookstore closed three of its locations and laid off a portion of its workers. Its revised plan, which needs approval from the U.S. Bankruptcy Court for the District of Colorado, sets an ambitious goal for the storied bookstore: emergence from bankruptcy by June 2024.
“Without a doubt we still have complicated negotiations to complete, challenging local economic pressures to navigate, and difficult decisions to make as we forge ahead toward establishing profitability,” Tattered Cover CEO Brad Dempsey said in a statement. “But with the continued hard work of our incredible team and support from people in Colorado as well as across the nation, we are optimistic about Tattered Cover’s future.”
By June, the company plans to have resolved about $3.4 million in unsecured debt, repair its relationship with vendors and restructure operations to become “a smaller, more modern and financially sustainable business.” The company said it is weighing several cost-cutting measures, including evaluating its current lease terms and exploring whether to keep its four existing retail stores or move to less costly locations.
Current Tattered Cover locations are its main Colfax branch, Union Station, Aspen Grove Shopping Center in Littleton and Stanley Marketplace in Aurora. Its Denver International Airport Location is operated under a license agreement with Hudson Bookstores.
Tattered Cover owes outstanding debts to several parties, including large publishers, creditors and landlords. Former CEO Kwame Spearman has also filed claims saying he is owed about $467,000 from out-of-pocket expenses, however Tattered Cover’s representation has objected to those claims.
The bookstore’s leaders have grown more optimistic about Tattered Cover’s future, due in part to a successful holiday sales period. However, despite that growth in revenue, the bookstore still reported a loss in revenue in January, citing higher health insurance premiums, wages and rent.
Debt payments are scheduled through 2027. Under the plan, the company plans to become profitable again by 2025. Tattered Cover said it expects the U.S. Bankruptcy Court to convene in May to rule on its reorganization hearing.
