Baker & Taylor - Chapter 11 Case Summary

Business Description

Headquartered in Bridgewater, NJ, Baker & Taylor, LLC ("Baker & Taylor" or the "Debtor"), is a historic book distributor that was founded in 1828 as a local book supplier in Hartford, Connecticut.

• Over more than a century, the company grew into one of the largest book distributors in the United States.
• By the latter part of the 20th century, Baker & Taylor was a leading global provider of English language books, media, software, and services, primarily to public and academic libraries in the United States.

Baker & Taylor and its affiliates provided top quality books and media resources from book publishers to thousands of libraries, universities, and other public and private customers across the United States and elsewhere.

As of the Petition Date, Baker & Taylor has a limited remaining workforce consisting of 19 full-time employees and 9 independent contractors assisting with the company's wind down of business operations.

• Some employees provide transitional services to LibraryOne Digital, Inc. in connection with the sale of the Digital Pub business.
• The Chief Executive Officer agreed to reduce his compensation to 50% of his former salary under a weekly retainer to economize on administrative expenses during the wind down.

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Corporate History

Private Equity Ownership and Economic Challenges

From 1994 to 2016, Baker & Taylor was owned by a consortium of private equity parties including Castle Harlan Partners ("Castle Harlan").

• During these years, despite its leading position in the book distribution industry, Baker & Taylor faced mounting economic challenges common to book and media publishers and distributors.
• From the mid-1990s forward, a number of structural hurdles to profitability increasingly impacted the company, including declining book sales, concerns about the future of physical books, and the nascent digital revolution.

Follett Ownership and Pandemic Impact

In 2016, Castle Harlan sold its interests in Baker & Taylor to the Follett Corporation ("Follett").

• Follett operated Baker & Taylor for approximately five years, but unfavorable economic trends continued, and the advent of the COVID-19 pandemic further damaged Baker & Taylor's prospects.
• In 2021, Follett sought to divest from multiple content and distribution divisions, including Baker & Taylor.

The 2021 Acquisition

On November 4, 2021, Follett sold Baker & Taylor to a group of officers and directors led by the current Chief Executive Officer (the "2021 Acquisition").

• To finance the acquisition, Baker & Taylor and its affiliated entities entered into a Loan, Security and Guarantee Agreement (the "Credit Agreement") with CIT Northbridge Funding I, LLC ("CIT"), through which CIT granted Baker & Taylor a credit facility (the "CIT Credit Facility") of up to $70 million to acquire and operate the business.

Post-Acquisition Setbacks

After the 2021 Acquisition, Baker & Taylor was well-positioned to recover from the pandemic and complete its adaptation to contemporary market conditions. Unfortunately, however, events unforeseen at the time of the 2021 Acquisition crippled its recovery and severely impaired liquidity.

• First, Baker & Taylor's operations were impacted in early 2022 by the emergence of the COVID-19 "Omicron" variant, which caused renewed fears of the virus' spread, significantly lowered the purchasing appetite of customers, and dramatically increased payroll costs and crippled warehouse efficiency.
• Second, two major cyberattacks in August and November 2022 severely impaired Baker & Taylor's operations, accounting and technology systems, further reducing liquidity and draining cash resources.

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Operations Overview

International Operations and Cost Reduction Initiatives

Baker & Taylor historically conducted certain international operations through separate legal entities organized under the laws of foreign jurisdictions, including subsidiaries located in the United Kingdom and India.

• In 2022, the company created a new wholly-owned subsidiary, Baker & Taylor IT Services India Private Limited ("B&T India"), to house certain marketing, human resources, finance, sales, and IT functions.
• In 2023, Baker & Taylor executed plans to offshore administrative functions and automate warehousing processes.
• Both of these efforts were intended to lower costs in 2024 and 2025 by shrinking Baker & Taylor's operating expenses and improving cash flow.

Fulfillment Centers

In August 2023 and March 2024, Baker & Taylor consummated sale/leaseback transactions of its two warehouse fulfillment centers, located in Commerce, Georgia and Momence, Illinois (collectively, the "Fulfillment Centers").

• Through these transactions, the company preserved the operational value of the Fulfillment Centers while generating approximately $26 million in proceeds to pay down the CIT Credit Facility.
• On December 31, 2025, the company vacated its Fulfillment Center in Commerce, Georgia, notifying the landlord, BT Commerce Fee Owner, LLC, of its intent to surrender the facilities.
• Shortly after the Petition Date, the company intends to remove its remaining inventory and other assets from the Momence Fulfillment Center and surrender possession of the premises to the landlord.

Overseas Divestitures

In 2025, Baker & Taylor divested two overseas operating businesses, James Bennett Pty Ltd. ("James Bennett") and Bridgeall Libraries, Ltd. ("Bridgeall").

• James Bennett is Australia's foremost supplier of books and media to libraries and provides print and digital acquisitions and collection development services. Baker & Taylor consummated the sale of its equity interests in James Bennett to Booktopia Holdings Pty Ltd. ("Booktopia") on May 15, 2025.
• Bridgeall sold its assets, principally including its "Collection HQ" book subscription business, to Valsoft Ireland Limited and Valsoft Scotland Limited (together, "Valsoft") under a June 17, 2025 Asset Purchase Agreement, while Baker & Taylor entered into a Sales Representation Agreement under which Baker & Taylor acted as a third-party reseller for CollectionHQ and related products and services.
• From the James Bennett and Valsoft transactions, Baker & Taylor paid an additional $16 million on the CIT Credit Facility in May and June 2025.

Business Divisions

From October to December 2025, Baker & Taylor marketed and ultimately sold three business divisions:

• Baker & Taylor Publisher Services ("BTPS"): A self-contained business division which provided publishing services and digital and physical book production, including printing and binding, print book warehousing and distribution, eBook conversion and distribution, and editorial and design services to publishers. Operations of BTPS were principally housed in Bookmasters, Inc., an Ohio corporation affiliated with Baker & Taylor.
  • On November 21, 2025, Baker & Taylor and Bookmasters consummated the sale of the assets of the BTPS division to LSC Communications Book LLC, d/b/a Lakeside Book Company ("Lakeside"), and CIT issued a partial release of its liens in order to facilitate the transaction.
• Digital Publishing business ("Digital Pub"): Operated by Baker & Taylor to provide access to e-books and e-audio books as a wholesaler to public library customers via a digital application.
  • On December 15, 2025 and December 24, 2025, Baker & Taylor consummated two asset purchase agreements regarding sales of the Digital Pub business to LibraryOne Digital, Inc. ("LibraryOne"). CIT issued a partial lien release to facilitate the transaction.
  • Under both asset purchase agreements, Baker & Taylor agreed to provide certain transitional services to LibraryOne in connection with the transfers. Such transitional services agreements shall expire on April 30, 2026.
• CamCat Publishing ("CamCat"): A Baker & Taylor division which provided publishing and publisher services to certain individual book publishers, principally of children's books and media.
  • On December 30, 2025, Baker & Taylor consummated the sale of CamCat assets to Marble Press, LLC ("Marble Press"). Under the Marble Press asset purchase agreement, Marble Press assumed the responsibility to pay all unpaid royalties owed to authors, illustrators, and other rightsholders relating to titles included in CamCat's portfolio of licensed books and content. CIT issued a partial release concerning the sale.

Facility Closures

During the wind down of operations, Baker & Taylor took steps to reduce operating costs by closing its facilities as such closure became possible.

• Baker & Taylor vacated a facility in Charlotte, North Carolina, notifying its landlord of its intent to surrender the facility.
• After vacating these facilities, Baker & Taylor retains its office location in Bridgewater, New Jersey, and its Fulfillment Center in Momence, Illinois, where the remainder of its inventory is located.

Remaining Assets

The following are Baker & Taylor's principal assets to be administered through the Chapter 11 case for the benefit of creditors: (1) accounts receivable due from libraries and other customers, (2) remaining inventory located in the Momence, Illinois Fulfillment Center, (3) certain contract rights and other rights the company holds against contract counterparties, and other assets with de minimis value.

• Accounts Receivable: Baker & Taylor holds and collects in the ordinary course of business accounts receivable, principally from library customers. As of mid-February 2026, the company held a gross balance of accounts receivable of approximately $3.4 million.
• Inventory: Baker & Taylor holds a remaining inventory of books and other content in its remaining Fulfillment Center, located in Momence, Illinois. The net value of this remaining inventory is likely approximately $100,000.
• Contract Rights: Baker & Taylor holds rights to collect earn-out and deferred compensation amounts under certain prebankruptcy agreements, estimated to total in excess of $1 million.
• Other Assets: Baker & Taylor retains certain additional assets, including approximately $40,000 in amounts remaining due for transition services it provides to LibraryOne in connection with sale of the Digital Pub business, certain intellectual property rights, and other assets with minimal value.

In addition, Baker & Taylor employed a liquidator, Great American Holdings, LLC ("GA Group"), to develop a plan for liquidating its inventory of books and media.

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Prepetition Obligations

Baker & Taylor has retired the CIT Credit Facility, its sole secured obligation. As of the Petition Date, the company's remaining obligations consist primarily of lease obligations and unsecured claims.

Secured Obligations

• Baker & Taylor's only remaining secured obligations are long-term financing lease obligations arising from the sale/leaseback transactions for the two Fulfillment Centers.
  • Baker & Taylor's aggregate capitalized liability under the Lease Agreements for the Fulfillment Centers totals approximately $43 million.
  • Aside from its lease rights, however, these obligations are not secured by any remaining Baker & Taylor assets.

Priority Unsecured Claims

• Baker & Taylor estimates it may owe between $1 and $2 million in unsecured obligations to former employees which are entitled to priority treatment under Section 507(a) of the Bankruptcy Code.
  • Certain employees may hold priority claims for unpaid medical reimbursements under a former Baker & Taylor "self-insured" medical insurance plan terminated as part of the wind down of the company's operations in October 2025. Such claims, if allowed, may be entitled to priority up to the statutory caps set forth in section 507(a)(5) of the Bankruptcy Code.
  • Baker & Taylor disputes any liability concerning the WARN Act complaints and believes it has valid defenses to any claims by employees based on alleged violations of Federal or state WARN acts. If such claims are allowed, however, such claims may constitute further claims entitled to priority (up to the applicable statutory caps) under section 507(a)(4) of the Bankruptcy Code.

General Unsecured Obligations

• Baker & Taylor believes its general unsecured obligations total approximately $120 million. These consist principally of:
  • Approximately $68 million in unsecured trade obligations to publishers and suppliers of book and media content.
  • Approximately $33 million in obligations to library customers who participated in a Baker & Taylor leasing program by which they prepaid for books and media to be delivered by the company, but which Baker & Taylor was unable to deliver.
  • Approximately $18 million in other unsecured obligations.

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Events Leading to Bankruptcy

Liquidity Crisis and Initial Response

The setbacks from the Omicron variant and the 2022 cyberattacks placed Baker & Taylor in a severe liquidity problem.

• The 2022 decline in accounts receivable eroded the company's borrowing base under the CIT Credit Facility and impaired access to capital to purchase fresh inventory.
• To address this challenge, Baker & Taylor began a series of steps in 2022 to increase liquidity, including efforts to monetize real property assets through the sale/leasebacks of real property assets, offshore and automate warehouse and administrative functions, and divest from certain overseas divisions of the company.
• Aging inventory depressed Baker & Taylor's borrowing base under the CIT Credit Facility, perennially starving the company of liquidity to pay down balances due to its major publisher vendors and thereby obtain trade credit for new purchases.

CIT Default Notice and Loss of Control

While the company's measures were calculated to reduce the company's position with CIT and make new credit available, intervening developments in Baker & Taylor's credit relationship with CIT frustrated this purpose.

• In late April 2025, CIT issued a Notice of Event of Default and Reservation of Rights (the "CIT Default Notice") under the Credit Facility, asserting Baker & Taylor was in default for failing to maintain a required "Fixed Charge Coverage Ratio" under the CIT Credit Facility.
• CIT reserved all rights under the facility and specifically disclaimed any obligation to make further funding available. As CIT held all Baker & Taylor operating revenues in one or more "lockbox" accounts, this meant that Baker & Taylor had no access to capital to pay even its ordinary operating expenses, absent CIT's discretionary decision to fund such expenses.
• As a result of these arrangements, CIT effectively controlled the Debtor's liquidity and had the ability to determine which operating expenses would be funded during the wind-down process.

The CIT Default Notice had a second consequence. Upon payment of the proceeds from the Collections HQ and James Bennett transactions, CIT unilaterally reduced Baker & Taylor's credit availability by executing a "lock up" of $8 million in available credit at this critical juncture.

• Baker & Taylor sought to negotiate a "lift" of the $8 million "lock up," but though CIT continued to fund expenses on a discretionary basis, it declined to lift the $8 million restriction.
• Critically, this meant that Baker & Taylor could not reduce balances due to publishers. Despite Baker & Taylor's consistent and transparent discussions with its trade creditors, in July and August 2025, trade creditors began to withhold further shipments to Baker & Taylor, leaving the company unable to fulfill customer orders and causing critical liquidity problems.

OCLC Litigation

Baker & Taylor's critical problems in 2025 were made worse by litigation initiated against the company by OCLC, Inc. ("OCLC"), a nonprofit library cooperative based in Dublin, Ireland.

• On March 26, 2025, OCLC filed suit against Baker & Taylor and Bridgeall in the United States District Court for the Southern District of Ohio, alleging that Baker & Taylor and Bridgeall wrongfully used certain data of "WorldCAT," a library information platform operated by OCLC, in developing a competing platform.
• While Baker & Taylor vigorously defended against the OCLC allegations, the onset of the litigation added substantial costs to the already fragile cash flow picture faced by the company.

Efforts to Secure New Financing and Sale

In August 2025, it became apparent that without new capital, the deterioration of Baker & Taylor's relationships with CIT and publishers, together with the OCLC litigation, would present an insurmountable challenge to continuing business operations.

• Baker & Taylor quickly pivoted to efforts to secure new financing to replace CIT, including by reaching out to trade creditors for strategic capital investment, and began exploring alternatives for sale of the company.
• Baker & Taylor retained a financial advisor, Riveron RTS, LLC ("Riveron"), to assist with strategies to address these challenges, including raising new debt or equity capital to sustain operations, pursuing a potential sale of the company's business and assets, and, if those alternatives were unsuccessful, assisting with an orderly wind down and liquidation to maximize recoveries for secured and unsecured creditors.

Together with Riveron, Baker & Taylor first sought to obtain new debt or equity financing to take out or supplement its position with CIT.

• Working with Riveron, the company identified 41 potential financing sources, and received 27 expressions of interest from potential counterparties.
• Ultimately, 5 parties executed term sheets for potential transactions and engaged in due diligence efforts with the company.
• Despite intensive efforts by management and Riveron, however, Baker & Taylor was unable to negotiate financing to provide new liquidity.

The ReaderLink Transaction and Its Collapse

In mid-August 2025, Baker & Taylor began exploring potential asset sale transactions.

• On September 6, 2025, Baker & Taylor, in cooperation with CIT, executed a letter of intent with ReaderLink, LLC ("ReaderLink") by which ReaderLink would purchase substantially all of Baker & Taylor's and its affiliates' assets through a private sale under Article 9 of the Uniform Commercial Code.
• The parties began financial due diligence, communications with the largest trade creditors, and drafting of dispositive transaction documents with the intention of closing the transaction on or before September 26, 2025.
• Among other terms, the parties agreed that ReaderLink would, upon closing, employ approximately 700 of Baker & Taylor's approximately 950 employees as ReaderLink employees. All other Baker & Taylor employees would continue to be employed by Baker & Taylor to provide services under a Transitional Services Agreement ("TSA") to last through the end of calendar year 2025.
• The parties began negotiation of the TSA, and ReaderLink extended employment offers to approximately 700 employees it intended to transition to employment with ReaderLink.
• By September 26, 2025, the parties had completed due diligence and exchanged drafts of the transactional documents. However, on the morning of September 26th, ReaderLink announced that it was withdrawing its offer to purchase Baker & Taylor's assets and rescinded the employment offers to Baker & Taylor employees.

Workforce Reductions and Wind Down

The failure of the ReaderLink transaction left Baker & Taylor with no realistic means to continue its operations. The company had no access to further CIT borrowing except on a discretionary basis and no prospect of new capital or a purchaser for its assets.

• As a result, while the company continued urgent efforts to find a new purchaser, it had no choice but to begin curtailing its operations and crafting a plan for an orderly wind down of its business.
• Among other concerns, the failure of the ReaderLink transaction caused an immediate inability to continue the employment of Baker & Taylor's full workforce, as CIT would not exercise discretion to continue funding the full workforce in a wind down budget.
• As a result, after discussions with CIT and with CIT's cooperation, Baker & Taylor on October 6, 2025 separated approximately 600 of its 950 employees from employment and provided notice to most remaining employees that their employment would end at scheduled times thereafter as Baker & Taylor completed its wind down.
• In addition, at approximately the same time as it separated the bulk of its workforce, Baker & Taylor was forced to terminate self-funded health insurance and profit sharing plans with its employees and to discontinue severance packages available to employees.
• These workforce reductions were undertaken only after the collapse of the ReaderLink transaction and under significant financial constraints imposed by CIT, which exercised control over the company's liquidity through lockbox arrangements and account control agreements. These decisions were made in consultation with advisors and were driven by the necessity of preserving remaining value for creditors while the company pursued potential asset sales and other restructuring alternatives.

Continued Pursuit of Strategic Alternatives

While Baker & Taylor took these initial steps toward winding down its operations, management continued to pursue other alternatives to produce the best possible outcome for creditors.

• Baker & Taylor approached several of its largest trade creditors to explore the possibility of rescue capital or strategic investment that could stabilize operations or support a sale of the business.
• In addition, the company received a confidential term sheet from a publicly traded strategic buyer in mid-October 2025, expressing interest in acquiring a substantial portion of the remaining operations.
• Management, together with Riveron, engaged with that party and disclosed the potential transaction to several of Baker & Taylor's largest trade creditors in an effort to secure support for the proposed transaction.
• Despite extensive discussions and due diligence, the proposed transaction ultimately did not proceed due to insufficient trade creditor support.

Asset Sales and CIT Payoff

With the failure of this second potential asset purchase, Baker & Taylor turned back towards a wind down of its operations. Baker & Taylor publicly announced plans to commence sales in bulk of its inventory of books and media through GA Group, accelerated its efforts to sell its BTPS, Digital Pub and CamCat-related assets and sought to liquidate contract rights and accounts receivable, all with a goal of paying out the secured CIT Credit Facility and obtaining whatever recoveries were possible for creditors.

• Throughout the wind down process, management worked intensively to pursue transactions which would maximize the value of the company's assets. Neither management nor any member received dividends, equity distributions, or other insider payments from the company. Management's focus was on preserving the value of the business and maximizing recovery for creditors.
• The proceeds generated from the wind down transactions were applied toward repayment of the CIT Credit Facility, reducing the balance owed to the secured lender and preserving value for the company's creditors.
• As a result of its liquidation efforts, Baker & Taylor retired the full balance of the CIT Credit Facility on February 13, 2026.

Ongoing Litigation

Baker & Taylor's wind down has been plagued by significant costs relating to litigation against the company.

• Principally, the OCLC litigation continues unabated.
• In Illinois and Georgia, former Baker & Taylor employees filed litigation on behalf of putative classes of claimants asserting rights under the Federal WARN Act arising from their termination from employment (the "WARN Act Plaintiffs"). No class has been certified in either matter. Baker & Taylor disputes its liability on these claims and believes it has valid defenses in the litigation.
• After retiring the CIT debt, the company continued efforts to liquidate remaining assets, but those efforts were further hampered by new litigation filed by former employees at Baker & Taylor's facility in New Jersey. On February 18, 2026, two former employees filed an Individual and Class Action Complaint against Baker & Taylor, BTAC Holding Corp. and the Chief Executive Officer, in the Superior Court of New Jersey for Somerset County, initiating the case entitled Carmichael, et al. v. Baker & Taylor, et al., Civil Action No. SOML 00023226, alleging violation of the New Jersey Millville Dallas Airmotive Plant Job Loss Notification Act, N.J.S.A. 34:21-1 et seq. (the "New Jersey WARN Act"). No class has been certified in the litigation. The Debtor disputes liability and believes it has valid statutory defenses to the complaint.

Chapter 11 Filing

On March 16, 2026, Baker & Taylor filed this case. Bankruptcy was not a preferred outcome for Baker & Taylor or its management. However, after exhausting all alternatives and repaying the secured lender through asset sales, a chapter 11 filing became the only practical means of completing the liquidation process in an orderly manner and maximizing creditor recoveries.