Book publishers outraged as retailer’s corporate rehabilitation filing gets nod

Publishers and bookstore owners were outraged after Interpark Songin Books began the procedure for court-approved corporate rehabilitation last month, less than three years after the retailer took over the bankrupt Song-in Books in 2017.

The retailer sold books it purchased from publishers to 2,000 bookstores nationwide.

Publishers received money from the retailer sometime after their books were sold.

With the retailer initiating corporate rehabilitation last month, publishers have been unable to receive money from the retailer. They are also unable to get their unsold books returned.

“Small publishing houses and one-person businesses will be the hardest hit,” an executive of a midsized publishing house in Seoul told The Korea Times asking for anonymity.

“Small publishers don’t have money for marketing, so they rely heavily on the retailer for the distribution and sales of their books.”

She said her publishing house lost money as it didn’t get what it was owed when rehabilitation procedure began. “We lost money back in 2017 when Interpark took over the then bankrupt Song-in Books. Now we suffer again because the retailer filed for corporate rehabilitation,” she said.

Feeling the pinch, about 150 creditors took to the street to protest Interpark’s action.

In a demonstration in front of Interpark Song-in Books, Monday, they urged the firm to be a socially responsible business.

“When Song-in Books went bankrupt in 2017, the publishing industry offered an 80 percent debt reduction as it believed in Interpark… The company is irresponsible as they took rehabilitation steps only two-and-a-half years after the takeover,” Yoon Chul-ho, chairman of the Korean Publishers Association, claimed during the protest.

The remarks came after the Seoul Bankruptcy Court approved Interpark Song-in Books’s steps for the rehabilitation procedure, June 26, as it suffered from growing debt. It reportedly has 13.7 billion won ($11.4 million) in debts to repay which includes 5.5 billion won owed to book publishers, as fewer people are buying physical books in the aftermath of the COVID-19 impact on the industry.

“The company decided to file for the rescue procedures as its operation may further damage the industry when larger bookstores continue to take a bigger share of the market and more people buy fewer paper books, in addition to the financial difficulties of smalland medium-sized bookstores following the spread of COVID-19,” an official at Interpark said.

If there is no buyer for the troubled wholesaler, the debts could be reduced in the company’s favor, which means creditors may not get a full repayment from the wholesaler. The conflict may linger unless the two sides come to an agreement.

The situation also arises about three years after the wholesaler filed for bankruptcy at the beginning of 2017 after failing to honor 10 billion won in matured debt owed to smaller publishing companies and other creditors. Some 2,000 publishers and 500 bookstores were affected back then.

Interpark, one of the country’s largest online-based shopping malls, purchased Song-in Books in December 2017, taking a 56.2 percent stake worth 4 billion won and renaming it Interpark Song-in Books. Since then, it has tried to revive the book company by creating synergy with its other business sectors, enjoying minor successes such as cutting operating losses.

But in the first quarter, Interpark Song-in Books saw an operating loss of about 900 million won and ended up filing for rehabilitation to avoid bankruptcy.

Insiders point out that the financial difficulties could have been largely anticipated as the current industry’s supply chain is hard to sustain and similar to a “revolving credit card payment” — payments in the industry are made based on unwritten “promises” or hypothetical accounting books without having a collective system to show clear sales data.