Grand Rapids-based national bookstore chain Family Christian faces an uncertain future after its plan to exit Chapter 11 bankruptcy collapsed amid questions regarding the interplay between the not-for-profit company and its evangelizing corporate parent.
Family Christian – which traces its roots back to its days as a Zondervan brand founded in 1931 – filed for bankruptcy protection on Feb. 11, facing competitive pressure in an increasingly digital economy. Since 2008, Family Christian’s sales have fallen 29% to about $216 million, according to court records.An initial plan hatched by Family Christian’s parent company to extract the chain from bankruptcy flamed out quickly after an arm of the U.S. Justice Department and major creditors accused the store of orchestrating an improper sale to an insider. The parent entity, Family Christian Resource Centers (FCRC), had wanted to form a new subsidiary to buy the bookstore chain from itself through a corporate bankruptcy procedure that allows bad debt and good assets to be bifurcated quickly when a quick buyer is found.
Under terms of the deal, FCRC, which is controlled by Georgia business executive Richard Jackson, had proposed to pay $28 million, assume leases, slash certain debt and pay off a secured loan Jackson acquired from JPMorgan Chase in the fall, according to court records.But the accord collapsed after it came under attack from virtually all major parties in the case.