Approximately 60 people impacted by Albert Whitman & Co.’s Chapter 11 bankruptcy petition gathered virtually on May 29 for a court-required Section 341 meeting of creditors that shed new light on the company’s finances and its future. Karen V. Newbury, a trial attorney at the U.S. Trustee Program’s Chicago office, presided over the meeting, noting that there were more creditors present than is typical during such meetings.
Albert Whitman president John Quattrocchi, who has co-owned the 106-year-old publisher with VP Pat McPartland since 2008, disclosed that the company employs a total of 10 people and generates $3 million in sales each year. Quattrocchi also disclosed that the company filed for Chapter 11 because Attila Gazdag, a former employee who worked for the publisher for three years, sued the company and Quattrocchi as co-defendant in a California court for breach of contract “and a firing,” adding: “We did not have the funds to defend ourselves in California, so we filed. We were profitable for 16 of our 17 years.”
Detailing Albert Whitman’s finances, Newbury noted that currently, the company has $18,368 in a bank account and a $25,000 security deposit on the rental of its facilities; the company valued its inventory of books as worth $719,061, and reported $661,723 in receivables under 30 days. Among the publisher’s creditors, only one is listed as having a secured claim: Republic Business Credit, whose $140,900 debt is secured by inventory and accounts receivable. Newbury declined to “run through each and every one of the unsecured claims.”
Asked if the publisher was current on all of its bills at the time of filing, Quattrocchi acknowledged that the company has a number of past-due debts—many of which, Newbury noted, are less than $1,000. Several large debts, however, still remain, including the debt incurred by the litigation relating to Gazdag and $67,194 owed for past due royalties to each of the two heirs of the creator of the bestselling Boxcar Children series. A number of printing companies and a storage facility in Wisconsin are also listed as owed significant amounts of money, and an author, identified only as “Wells,” is owed $65,180, which McPartland acknowledged is past due.
Moving on to Albert Whitman’s statement of financial affairs, Newbury noted “a fairly significant drop” to the company’s gross revenue between 2023 and 2024, which Quattrocchi ascribed to the loss of the Boxcar Children sales after the rights to the series were sold for $3 million to Penguin Random House in 2023. The money from that sale, he added, was entirely spent on paying back a bank loan and associated fees. “We had a line of credit that was called on us because of the situation we were in,” Quattrocchi said. “We were forced to sell the Boxcar Children in order to pay the bank back.”
Questions ignite sparks
Interactions between Albert Whitman’s co-owners and the creditors present became contentious after Newbury finished her questions and Gazdag’s attorney, Scott Clair, stepped up to ask his own. A testy back-and-forth between Clair and Quattrocchi began with Quattrocchi being asked for clarification on his earlier statements about filing for Chapter 11 because the publisher could not afford to litigate in California.
When Quattrocchi explained that “the California attorney wanted $150,000–200,000 up front,” Clair pointed out that Gazdag filed his case in January 2023—more than two years before Albert Whitman filed for Chapter 11 this April. “Was the Gazdag litigation the precipitating factor in your filing, or did you have other problems that would have forced you to file anyway?” Clair asked. “You owe a lot of past due debt, do you not?”
Umair Kazi, an attorney and the director of policy and advocacy at the Authors Guild, then questioned Quattrocchi about his statement that AW & Co was profitable for 16 of the past 17 years. “There have been chronic nonpayment and underpayment issues over the years, as you know,” Kazi stated, “and especially during the 2023-2025 period before you filed for bankruptcy. Can you explain why authors were not paid in many cases?”
Quattrocchi attributed the lack of payments to authors on the publisher’s $2.2 million investment to launch Albert Whitman Media in 2021, which, he noted, was projected as a $500,000 investment that “turned into a big nothing.” (Gazdag was head of AW Media). AW Media, he said, “put us into a hole, and then that hole forced us to sell the Boxcar Children, and that money went to pay the bank; there was nothing left after we sold Boxcar Children to pay anyone else.”
Marc Hirschfield, an attorney retained by the Authors Guild, also asked Quattrocchi whether “all the authors received in a timely fashion royalty statements on all the books that you had sold on their behalf,” and Quattrocchi insisted that they did. “That’s not my understanding,” Hirschfield responded.
Several authors subsequently confirmed that Albert Whitman was habitually late in mailing royalty statements that often contained errors. Chitra Soundar, an author representing herself, complained to Newbury that she and other authors do not know how much the publisher actually owes them, because they do not receive accurate royalty statements in a timely fashion. As such, she said, they cannot file a claim with the court. Soundar also noted that if the Authors Guild had not notified its members of the 341 meeting, she and others would not have known about it, as they received no notice from either the publisher or the court.
“It’s not an occasional omission or some random, erratic thing,” added Mary Cummings, owner of Great River Literary Agency in St. Paul, Minn. “It’s lots of authors we’re talking about.”
As the meeting drew to a close, Newbury asked Quattrocchi and McPartland whether Albert Whitman has any plans for reorganization, sale, or liquidation. “We are exploring our options,” said McPartland. “We do think it’s a viable business, and some financial challenges exist, but we think Chapter 11 will resolve those. Whether that involves a standard reorganization or sales of some assets, that hasn’t been determined.”