On Monday, May 21st, one of the most venerable names in U.S. publishing filed for Chapter 11 bankruptcy. For Houghton Mifflin Harcourt Publishing Co., this is their second recent restructuring.
The company had been working with its lenders for some time, so the announcement was not a surprise. And Houghton Mifflin Harcourt was able arrange a “pre-packaged” financial restructuring plan, which they say will allow them to emerge successfully from Chapter 11 by the end of June.
The company stated that they “ will maintain normal day-to-day business operations throughout the restructuring process, and we expect no disruptions to our relationships with our customers, agents, authors, employees, business partners and suppliers.”
Over the years, Houghton Mifflin Harcourt and its predecessors have published the works of such luminaries as Mark Twain, Ralph Waldo Emerson, J.R.R. Tolkien (“Lord of the Rings” series), Paul Theroux, Jane Austen – and even publishes the “Curious George” series. The company says its author list includes 8 Nobel Prize winners, 47 Pulitzer Prize winners and 13 National Book Award winners along with winners of numerous other prizes.
But lately an increasing portion of its business has come from education – according to its website providing interactive and printed educational products to some 60 million students in 120 countries. Recent cutbacks in educational spending have been reported as one of the main causes of Houghton Mifflin Harcourt’s financial problems.
As to the future, Houghton Mifflin Harcourt is not living off its past glory. It has an agreement to print and distribute electronic books owned by an affiliate of Amazon.com. Amazon benefits by selling books to people who don’t visit its website and Houghton Mifflin Harcourt gains a new source of revenue. Its educational offerings include a math curriculum app for the iPad, online supplement programs, mobile apps and online game-based learning.
The bankruptcy plan is to have the company emerge with a more appropriate capital structure that it can use to pursue growth opportunities and hopefully success.