Future Scene - FS MED Addition

Family Christian Stores Chain Files for
Bankruptcy
In a news release, Family Christian Stores
announced it has filed for bankruptcy
under Chapter 11 of the U.S. Bankruptcy
Code. They have 250 stores and 4.000
employees.
Family Christian Stores was purchased in
2012 by three businessmen, Rick Jackson,
Mike Kendrick and Larry Powell, and they
donated to Family Christian Ministries, a
not-for-profit 501(c)(3) organization. The
three men retain control Family Christian
Stores since Jackson is the president of the
nonprofit and the other two men are
directors of it according to the most
recent IRS Form 990 disclosure.
Questions Emerge
Family Christian Stores does not expect to
close any stores or lay off any employees,
but their plan nevertheless raises questions.
All companies and organizations must have
more income than expenses, so the fact the
bookstore chain was owned by a nonprofit is
a problem. If Family Christian Stores was
not turning a profit, it means that Family
Christian Ministries did not receive money
for Christian outreach as promised to
bookstore customers. If the nonprofit
received funds, it was at the expense of
Family Christian Stores creditors.
If Family Christian Ministries owned the
bookstore chain, there is a question about
why it has not been dissolved in accordance
to IRS regulations. To avoid that, it appears
that the failed company will be sold to a new
organization with the same leadership. A
newly formed subsidiary of Family Christian
Ministries will serve as the lead bidder for
a Section 363 sale process, according to
information supplied by Family Christian
Stores.
The new entity will maintain operation of
Family Christian Stores 266 stores in 36
states and its bookselling website,
www.familychristian.com.
Bankruptcy a Result of Prayerful
Consideration
Chuck Bengochea, CEO of Family Christian
Stores, said “We have carefully and
prayerfully considered every option. This
action allows us to stay in business and
continue to serve our customers, our
associates, our vendors and charities around
the world.” Bengochea has no experience in
the bookselling industry; he assumed his
present role in June, 2014 after serving as
the CEO of The Original Honeybaked Ham
Company of Georgia.
It seems that creditors may take a big hit
from this prayerful consideration. According
to Publishers Weekly , Family Christian Stores
owes $7.5 million to the Zondervan and
Thomas Nelson divisions of
HarperCollins, $1.7 million to Tyndale
House, $516,414 to B&H Publishing Group,
$537,374 to Faithwords and $572,002 to
Barbour Publishing. Spring Arbor, a book
distribution company owned by Ingram, is
owed $689,533.
While Family Christian Stores was losing all
that money, former CEO Earl Bartow was
collecting an annual salary of $501,429 plus
other compensation of $51,427 according to
IRS filings. The other seven members of the
management team collected over $1.3
million in salary plus nearly a quarter of a
million dollars in other compensation
annually.
UPDATE: Publishers Weekly reported that it
was revealed at the bankruptcy hearing held
on February 17,2015 that Family Christian
Stores owes $100 million. $58 is secured
debt, and the other $40 million is unsecured
debt. Unsecured creditors are unlikely to get
their money back or may have to settle for
pennies on the dollar.
The secured debtors are Credit Suisse ($34
million) and FC Special Funding ($24
million). The quirk in that the person behind
FC Special Funding is Rick Jackson, the same
person who donated the bookselling chain
to Family Christian Ministries and is
allegedly set to buy it back after the
bankruptcy. That means Jackson will receive
$24 million as a result of the bankruptcy
and others will be left empty-handed.
Jackson was represented at the hearing by
Todd Meyers of the firm Kilpatrick
Townsend, based in Atlanta, according to
Publishers Weekly. He said. “My client
[Jackson] wants to wear the white hat here,”
but some observers think that is impossible
under the circumstances. Publishers Weekly
said, “One point raised during the six-hour
hearing before Judge John T. Gregg was the
‘significant issue of transparency,’ according
to Credit Suisse bankruptcy attorney Jennifer
Hagle.”
Business as Usual
According to Family Christian Stores,
business will continue as usual after the
bankruptcy. The same leadership will
acquire the company and continue to run it
under the same nonprofit banner.
Bengochea said, “Our customers will not see
any change in operations during this
process. After the court approves the sale, we
can begin to reinvest in our stores and bring
our customers products and services that will
help us better fulfill our mission.”
Family Christian Ministries also owns two
other companies through their nonprofit
orgnanization, iDisciple, a website, and
Giving Films, a movie production company.
These two companies are not part of the
bankruptcy and will continue to operate
independently of Family Christian Stores the
company said.

Family Christian Stores: Christian Bookstore: FamilyChristian.com Family Christian stores - leading Christian store selling books, bibles and music. 100% of Family Christian bookstore profits are donated to Christian charities.