attorney

With all the e-publisher scandals breaking into the light nowadays, I recently posed a hypothetical situation to my real attorney who specializes in bankruptcy as I also wanted the basic answers numerous injured authors sought. I don’t relish the idea of any author doing anything that could actually cost them in situations like several of the current scandalous ordeals so I hope this offers some understanding.

Bankruptcy is federal meaning states have little to no power and cannot overturn. If bankruptcy were state controlled then the laws would vary so much that just because you file in one state does not mean the law applies in all states hence the reason bankruptcy is federal jurisdiction and all states must mandatorily comply with the ruling no matter where the court resided when the decision was made.

Bankruptcy's normal timeline:

(provided there are no complications, discovery of hidden assets or income, or creditors who suddenly storm in because they never received notification).

30 days after signing the paperwork in your attorney's office, you attend a creditors meeting where you answer a bunch of questions, face your creditors, live through the legal snarls then go home,

then wait 30 days for any other creditors to voice their missed words or get their paperwork in,

then wait 60 days for the smoke to settle,

thus totaling 90 days after the creditors meeting at which time the final paperwork for dismissal or discharge will be sent to the debtors and creditors to show the court's decision.

Bankruptcy legally freezes anything that can be considered an asset (something of value such as a contract that might make money) backdated six months from the filing date until after the bankruptcy court dismisses or discharges the case.

This means you cannot:

plagiarize a manuscript (even if it is yours),
change the proper names and re-title it to re-sell it (even if it is yours),
contract it with another publisher (even if it is yours)
change your name to do any of the above.

Doing any of the above not only gets you, the author who committed the offense in trouble, but also the innocent publisher who trusted your word when you signed a new contract with them. Know this... if Publisher A signs a contract with you and had any inkling of an idea they might even consider filing bankruptcy, it is considered 'gaming the system' and let me tell you that sentence carries some very heavy penalties.

My attorney did assure me that:

If all you want is the rights your contract granted the publisher, hold on and ride out the storm.
Yes, if you want your royalties you will have to file the proper paperwork and follow the rules set by the law.
No, your copyright is not in jeopardy as such was never given in the contract to the publisher to begin with.

Below you will find the question I posed to my bankruptcy attorney about solo authors and coauthors. He was kind enough to provide me an answer. I did copy and paste his words. I hope this eases some of your concerns.

Please note that for this I'm using a:

false publisher = Dimple Dear Publishing House Press (at least I hope that's not a real publisher)
false coauthor = Mutinous Amadeus (now that's worse than naming a boy Sue)
false date = Insert Date

Hypothetical situation

Mr. Attorney,

I have a small, stable e-publisher called eXtasy Books who produces e-books (on line books…some day I will make money). Mutinous Amadeus coauthored two of my e-books with my stable e-publisher, eXtasy Books.

Down side. Mutinous Amadeus signed a contract to publish an e-book Mutinous Amadeus wrote alone and proposed one we coauthored to Dimple Dear Publishing House Press. I did not sign the contract even though Dimple Dear Publishing House Press accepted the proposed book. Dimple Dear Publishing House Press is now talking of filing bankruptcy by Insert Date. If Dimple Dear Publishing House Press files bankruptcy, what happens to Mutinous Amadeus’s e-book contracts Dimple Dear Publishing House Press holds as a publisher, what happens to the proposed e-book contract Dimple Dear Publishing House Press holds that Mutinous Amadeus signed and I did not, and will any of my books Mutinous Amadeus coauthored with my stable publisher, eXtasy Books, be affected by any of the contracts Mutinous Amadeus signed with Dimple Dear Publishing House Press?

My Attorney's response:

First, your friend's contract is with that Dimple Dear Publishing House Press on her solo book, so whether they have fulfilled the contract under bankruptcy supervision, or have breached the contract under bankruptcy supervision, they are... wait for it.... under bankruptcy supervision. Now, she needs to know what type of bankruptcy. If it were a biggie, like Random House, they'd file a reorganization, and her contract would be considered an asset of the estate, for which the trustee may wish to continue the contract to raise revenue. On the other hand, if they are tiny (or just a dude), they are filing a chapter 7 and it is doubtful their trustee will want to take the time to try to find a buyer of the contract. Also, if her contract is breached or sold to a party who cannot possibly comply, then the trustee will probably surrender the interests of the court in the contract. That would leave the publisher the right to comply with the contract, but there is also an argument that, even if he always and totally complied, the bankruptcy would constitute an anticipatory breach of some kind and entitle her to withdraw (after the bankruptcy trustee abandons it.)

As to the contract she signed but you didn't, the trustee has the right to enforce her contract but not yours (since there is no yours), so you have no fear of being sued, and if the trustee does somehow find a way to take hold of the contract and use it to make a bazillion samoleans, then you and the friend can litigate over authorship rights. For now, it's like her book. If you wait until the bankruptcy is over, there probably will be a surrender of what (to the trustee) is an asset which cannot raise money without too much risk of spending even more. In other words, wait and I predict they'll dump the contract and leave you both free.

And no, I can't see how a bankruptcy involving a coauthor on one book would in any way hamper your other books with a different contract and a different publisher.

Hope that helps,

Mr. Attorney