This morning we are issuing the following press release:
Brooklyn, N.Y., Feb. 23, 2009 — Dumbo Books of Brooklyn has announced that it filed for Chapter 11 protection from its creditors on Monday, saying a massive slump in revenue from book sales was to blame.
The company owns a small press publisher of literary books and three nondaily online newspapers, including The Los Angeles World-Telegram & Star, and has about 3.5 employees.
According to Richard Grayson, the company’s chief restructuring officer who filed a declaration in the case, unaudited financial statements for the fiscal year ending Nov. 30 reported $5,963 in assets and $18,692 in debt, including unpaid interest. Revenue has fallen more than 70 percent since 2006, the company said in bankruptcy court documents filed in Delaware.
Grayson said in a statement that Dumbo Books "anticipates that the Chapter 11 process will allow it to significantly reduce debt from its balance sheet while facilitating a strategic reorganization of the company, which will place it in the strongest possible position to sustain its momentum despite extremely challenging market conditions for books like Who Will Kiss the Pig? Sex Stories for Teens, which up until recently was 3,765,633 on Amazon's best seller list."
Dumbo Books, based in the Williamsburg neighborhood of Brooklyn despite its name, proposes a restructuring in which it would cancel its stock — it traded for less than one cent on Friday — and become controlled by its lenders.
Grayson called the filing "ironic," noting, "Just like most of the few remaining readers of our books, we couldn't get past Chapter 11."