Family Christian Sued by Publishers for Attempting to Sell Their Products at Future Auction
A lawsuit has been filed by Christian publishers against retailer Family Christian due to the company's decision to unload their remaining inventory at a future auction after it declared bankruptcy last month.
The joint lawsuit filed by 27 companies was created due to the retailer's decision to sell around $20 million worth of consigned books, music, DVDs and church supplies at an auction scheduled for later this year. The companies include United Methodist Publishing House and Discovery House Publishers.
Family Christian's lawyer Todd Allmassian commented on the lawsuit to MLive.com stating that it will be a "useful vehicle for resolving the competing interests between the vendors who sold the inventory and the financial lenders who are claiming liens on the inventory."
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These companies provided the retailer with "consignment inventory" under a contract that required it to pay for the products after customers purchased them from their locations. At an auction, the publishers will not have the opportunity to recoup their money.
FCS filed for bankruptcy last month and said it wanted to include the consignment inventory when it sells off its assets to pay creditors. Court documents reveal that the company owes banks and vendors about $97 million which excludes the consignment inventory.
"What is happening … is that Family is basically saying that they will take ownership of that product so that they can sell it," said Mark Kuyper, president of the Evangelical Christian Publishers Association, which has been monitoring the bankruptcy for member publishing companies.
The plaintiffs requested that the bankruptcy judge not include the consignment goods in Family Christian's proposed asset sell-off and also asked that the retailer either pay for the products or return them.
Family Christian, based out of Grand Rapids, Michigan, has over 266 stores across 36 states. FCS President and CEO Chuck Bengochea commented on the decision at the time.
"We strive to serve God in all that we do and trust His guidance in all our decisions, especially this very important one," he 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."
