A boy reaches for a book on the top shelf in the children’s section of the Tattered Cover Book Store on Colfax Avenue in Denver on June 11, 2016. (Kathryn Scott Osler, The Denver Post)
Tattered Cover, the city’s most recognizable bookstore, filed for bankruptcy Monday and will reverse a recent expansion effort after losing more than $500,000 in the first nine months of the year.
The 52-year-old bookstore chain, which its current ownership group purchased in late 2020, filed for Chapter 11, which allows it to keep operating while restructuring the business and paying creditors over time.
Brad Dempsey, a bankruptcy lawyer who recently took over as Tattered Cover’s CEO, told BusinessDen Monday that the store in LoDo’s McGregor Square will close Oct. 28. Recently opened stores in Westminster and Colorado Springs locations will close Saturday. He said 27 of the company’s 103 employees will be laid off.
Books and other inventory will be transferred to the four Tattered Cover stores that remain: along Colfax in Congress Park, inside Union Station, in Littleton and in Aurora’s Stanley Marketplace, where the company has a children-specific store.
The bankruptcy filing was submitted by Bended Page LLC, which announced its acquisition of Tattered Cover in December 2020. Denver natives David Back and Kwame Spearman said at the time they would operate the business; Spearman served as CEO but resigned that position this spring to focus on his bids for public office.
Several prominent Coloradans were named as Bended Page investors at the time of the acquisition, including Illegal Pete’s founder Pete Turner, former DaVita CEO Kent Thiry, Rockies co-owner and CEO Dick Monfort and the Gart family, which sold its sporting goods chain to Sports Authority and now owns notable real estate.
According to bankruptcy documents, Tattered Cover lost $667,882 on revenue of $6.2 million between the start of this year and the end of August. The business did $10.5 million in revenue last year, Dempsey said.
The company said it has 200 to 999 creditors and owes between $1 million and $10 million total. Elsewhere in the filings, Tattered Cover said it owes $2.2 million to its top 20 creditors, half of which are publishing companies. The business said it owes Spearman $198,000 and former owner Len Vlahos $215,000 — both for loans.
Tattered listed $3.1 million in assets, $1.7 million of which is its book inventory. The filings also detailed $43,102 in bookmarks and $16,178 in gift wrap and ribbons.
“We intend to be out of bankruptcy by the first half of 2024, on a smaller, leaner, more modern platform that’s sustainable and profitable going forward,” Dempsey said. “I want this company to remain an iconic institution that all of our kids and grandkids know and love.”
Dempsey said he was hired in April to consult Tattered Cover on its finances before stepping in as CEO in July. He attempted to restructure some of its loans and expenses, and sought out investors to avoid bankruptcy, to no avail.
“It became pretty evident pretty quick that there were no investors out there willing to invest further in the company on the size and platform that it is today with the historic debt and balance sheet,” Dempsey said.
Margie Gart, Leslie Rainbolt and Dempsey invested $300,000 to purchase inventory in July, he said, but Tattered Cover ultimately needed more funds.
“We were really cash-poor in the summer and knew we needed to make some changes,” Dempsey said. “Seeing our inventory start to dwindle and not be able to replenish … the situation became critical given the holiday season coming up.”
Andrew D. Johnson with Onsager Fletcher Johnson Palmer is representing the company in bankruptcy proceedings.
Once its bankruptcy filing is approved, Dempsey said the company will receive a $1 million loan from Gart and Rainbolt, which will fund severance packages for laid-off employees and bulking up stock ahead of the holidays. Rainbolt is a doctor and parent of the company’s former chief marketing officer.
“I remember as a kid tripping over books; there were so many at the Cherry Creek store,” Dempsey said. “That’s not where we’re at, and we intend to get back to that experience.”
Bended Page bought Tattered Cover from Vlahos and Kristen Gilligan. Before selling, Vlahos and Gilligan — who had bought the business in 2015 from Joyce Meskis, who had been the owner since 1974 — said the pandemic was financially devastating and worried they wouldn’t be able to keep the business alive.
Tattered Cover had four locations and was preparing to open its fifth in Westminster when the current owners bought the company. Ahead of the acquisition, in a pitch to potential investors obtained by BusinessDen, Bended Page said that Tattered Cover did or expected to see revenue of $8 million in its 2020 fiscal year.
The group forecasted revenue of $37 million by 2024 through a variety of possible strategies. It teased expansion to markets like Colorado Springs and Fort Collins, and said millions could be made by entering the bulk books business by selling large orders to schools and companies, launching some sort of a subscription plan, making some new hires and focusing on selling more non-book items such as clothing or art.
A boy reaches for a book on the top shelf in the children’s section of the Tattered Cover Book Store on Colfax Avenue in Denver on June 11, 2016. (Kathryn Scott Osler, The Denver Post)
Tattered Cover, the city’s most recognizable bookstore, filed for bankruptcy Monday and will reverse a recent expansion effort after losing more than $500,000 in the first nine months of the year.
The 52-year-old bookstore chain, which its current ownership group purchased in late 2020, filed for Chapter 11, which allows it to keep operating while restructuring the business and paying creditors over time.
Brad Dempsey, a bankruptcy lawyer who recently took over as Tattered Cover’s CEO, told BusinessDen Monday that the store in LoDo’s McGregor Square will close Oct. 28. Recently opened stores in Westminster and Colorado Springs locations will close Saturday. He said 27 of the company’s 103 employees will be laid off.
Books and other inventory will be transferred to the four Tattered Cover stores that remain: along Colfax in Congress Park, inside Union Station, in Littleton and in Aurora’s Stanley Marketplace, where the company has a children-specific store.
The bankruptcy filing was submitted by Bended Page LLC, which announced its acquisition of Tattered Cover in December 2020. Denver natives David Back and Kwame Spearman said at the time they would operate the business; Spearman served as CEO but resigned that position this spring to focus on his bids for public office.
Several prominent Coloradans were named as Bended Page investors at the time of the acquisition, including Illegal Pete’s founder Pete Turner, former DaVita CEO Kent Thiry, Rockies co-owner and CEO Dick Monfort and the Gart family, which sold its sporting goods chain to Sports Authority and now owns notable real estate.
According to bankruptcy documents, Tattered Cover lost $667,882 on revenue of $6.2 million between the start of this year and the end of August. The business did $10.5 million in revenue last year, Dempsey said.
The company said it has 200 to 999 creditors and owes between $1 million and $10 million total. Elsewhere in the filings, Tattered Cover said it owes $2.2 million to its top 20 creditors, half of which are publishing companies. The business said it owes Spearman $198,000 and former owner Len Vlahos $215,000 — both for loans.
Tattered listed $3.1 million in assets, $1.7 million of which is its book inventory. The filings also detailed $43,102 in bookmarks and $16,178 in gift wrap and ribbons.
“We intend to be out of bankruptcy by the first half of 2024, on a smaller, leaner, more modern platform that’s sustainable and profitable going forward,” Dempsey said. “I want this company to remain an iconic institution that all of our kids and grandkids know and love.”
Dempsey said he was hired in April to consult Tattered Cover on its finances before stepping in as CEO in July. He attempted to restructure some of its loans and expenses, and sought out investors to avoid bankruptcy, to no avail.
“It became pretty evident pretty quick that there were no investors out there willing to invest further in the company on the size and platform that it is today with the historic debt and balance sheet,” Dempsey said.
Margie Gart, Leslie Rainbolt and Dempsey invested $300,000 to purchase inventory in July, he said, but Tattered Cover ultimately needed more funds.
“We were really cash-poor in the summer and knew we needed to make some changes,” Dempsey said. “Seeing our inventory start to dwindle and not be able to replenish … the situation became critical given the holiday season coming up.”
Andrew D. Johnson with Onsager Fletcher Johnson Palmer is representing the company in bankruptcy proceedings.
Once its bankruptcy filing is approved, Dempsey said the company will receive a $1 million loan from Gart and Rainbolt, which will fund severance packages for laid-off employees and bulking up stock ahead of the holidays. Rainbolt is a doctor and parent of the company’s former chief marketing officer.
“I remember as a kid tripping over books; there were so many at the Cherry Creek store,” Dempsey said. “That’s not where we’re at, and we intend to get back to that experience.”
Bended Page bought Tattered Cover from Vlahos and Kristen Gilligan. Before selling, Vlahos and Gilligan — who had bought the business in 2015 from Joyce Meskis, who had been the owner since 1974 — said the pandemic was financially devastating and worried they wouldn’t be able to keep the business alive.
Tattered Cover had four locations and was preparing to open its fifth in Westminster when the current owners bought the company. Ahead of the acquisition, in a pitch to potential investors obtained by BusinessDen, Bended Page said that Tattered Cover did or expected to see revenue of $8 million in its 2020 fiscal year.
The group forecasted revenue of $37 million by 2024 through a variety of possible strategies. It teased expansion to markets like Colorado Springs and Fort Collins, and said millions could be made by entering the bulk books business by selling large orders to schools and companies, launching some sort of a subscription plan, making some new hires and focusing on selling more non-book items such as clothing or art.
