Tattered Cover, the Colorado bookstore chain, announced on October 16 that it filed for Chapter 11 bankruptcy protection and a petition for reorganization. As a result, the group will close its locations in Denver’s McGregor Square, as well as stores in Colorado Springs and Westminster. The bankruptcy was filed on Monday in the United States Bankruptcy Court for the District of Colorado. The filing said Tattered Cover owes its numerous creditors between $1 million and 10 million dollars. Tattered Cover’s creditors include large book publishers like Penguin Random House, Simon & Schuster, and Harper Collins Publishers.Tattered Cover first opened in 1971 and celebrated its 50th anniversary in 2021. The bookstore chain is the largest independent bookstore in Colorado and one of the largest independent bookstores in the country. The bookstore chain will try to remain in business and reorganize during the bankruptcy process.The filing comes three years after the local business chain was sold to an investment group, Bended Page, LLC. The bookstore chain expanded to include two more locations in Westminster and Colorado Springs, despite economic uncertainty during the COVID-19 pandemic. At the time one of the founding partners of the investment group, Kwame Spearman, told Denverite in an interview that growth was how they planned to avoid bankruptcy. “When we bought Tattered Cover, the organization was headed towards bankruptcy,” Spearman tells Denverite in a 2020 article. “The amount of revenue from our stores was not enough to support the entire organization. To secure a future for our brand and avoid bankruptcy, we had two options—to grow or dramatically cut costs with company-wide layoffs. We chose to grow. By adding more stores, we’re hoping to provide more revenue—which will help us get to a point where we can pay people what they deserve.”Spearman served as Tattered Cover’s CEO until April and has since run for mayor and now Denver School Board.
What’s next for Tattered Cover?
Tattered Cover expects closure to begin on Monday, October 23 and be completed in November. The company announced it will transfer the inventory and technology at stores to its other locations in Union Station, Littleton, Aurora, and Colfax Avenue. The company has said at least 27 employees will likely lose their jobs as a result of the closure. Tattered Cover is currently working on severance packages for those workers, although they also said impacted employees may fill temporary roles at other locations.In a news release by Tattered Cover, CEO Brad Dempsey says, “The board of directors, senior management, and prospective lenders and investors agree that reorganizing… is the most expeditious way to regain our financial footing so Tattered Cover can continue its long legacy as a favorite Colorado destination and champion the First Amendment for generations to come.” Dempsey was appointed as CEO in July. Dempsey adds that, “Our objective is to put Tattered Cover on a smaller, more modern and financially sustainable platform that will ensure our ability to serve Colorado readers for many more decades. Restructuring for long-term viability requires managers to make very difficult business decisions that affect people and business partners, and we intend to do what we can to minimize these impacts. We’re thankful for the professionalism and dedication of our management and staff in helping Tattered Cover transition to its next successful era.”Before being appointed as CEO, Dempsey worked as a bankruptcy lawyer and unsuccessfully ran for Colorado’s 7th Congressional District, failing to secure enough ballot signatures to make it onto the 2022 ballot. Tattered Cover will still honor gift cards, and existing orders will be fulfilled. The bookstore chain’s leadership hopes the chance to reorganize will allow the company to move forward. “The company is not going away,” Spearman says in an interview with 9News. “This move allows Tattered Cover to survive.”
By Owen Swallow
