Upgrade your account to a Community Supporter account and remove most of the site ads.

Reply to thread

Message: <blockquote data-quote="robertsconley" data-source="post: 9696870" data-attributes="member: 13383">Keep in mind that the goal in bankruptcy is to pay off as many debts as possible. So whatever money is available gets divided proportionally among the creditors, based on how much they’re owed.But some debts are tied to a specific asset, something the bankrupt person or company owns. For example, if someone owns a house but hasn’t fully paid off the mortgage, that mortgage is secured by the house itself. In bankruptcy, the mortgage holder gets priority, but only for the house. They don’t get first dibs on anything else.For that to happen, however, specific legal steps must be taken. There needs to be a formal agreement, and the creditor must publicly file a lien, essentially a legal claim, against the property. If those steps aren’t followed, the debt is treated like any other and only gets a share of whatever money is left after priority claims are paid.So, in the case of Diamond, there’s probably a consignment agreement in place. But to turn that into a debt tied to a specific asset, in this case, the inventory of books, the publisher would have had to take additional legal steps, including filing a UCC-1 notice in the state where Diamond is based. If they didn’t do that, the books aren’t legally “secured” and the publisher just becomes another unsecured creditor, stuck waiting in line like everyone else.It sucks, but U.S. bankruptcy law is trying to be fair by being strict about who gets priority. If there’s blame to go around, it should start with Diamond and any other distributor that operates on consignment. They know how this works. They’ve done it hundreds of times, with hundreds of publishers. They have the legal edge.Sure, you could say publishers should have hired attorneys. But let’s be honest: it’s Diamond who’s been through this process before. If they were actually committed to being ethical or supportive business partners, they’d give newcomers a heads-up: “Hey, we can’t give legal advice, but you might want to talk to someone about securing your consignment inventory.” That simple warning could save a small publisher from losing everything.</blockquote>

Verification