With digital books booming in popularity, there’s been a noticeable decline in the number of physical books being published and sold. While this trend has mostly affected the mainstream commercial market, now academic publishers are facing the consequences as well. Cengage Learning has filed for protection under Chapter 11 bankruptcy. As one of the largest textbook publishers in the nation, Cengage Learning’s decision to file for Chapter 11 bankruptcy is major news in the publishing industry.
Continuing Operation through Chapter 11
With the help of a bankruptcy lawyer, Cengage Learning will be able to continue operations throughout its Chapter 11 filing. Currently, Cengage Learning holds an approximately $5.8 billion debt. The private equity-backed education company hopes that the Chapter 11 bankruptcy will help eliminate at least $4 billion from the organization’s debt. Aside from help provided by their bankruptcy lawyer, Cengage Learning has also received support from an informal group of their own creditors. These creditors support Cengage Learning’s current plan and are owed approximately $2 billion in debt.
The Chapter 11 filing by Cengage Learning is indicative of a larger trend shaking the publishing world. As more and more books are being published digitally and the used book market continues to boom among college students, former education leaders are now struggling in today’s economy.
Cengage Learning hopes to work with its bankruptcy lawyer to continue operations under Chapter 11, and to use the opportunity to re-strategize as they move forward. Considering changes in the market, economy, and government policies will shape how the company moves forward, especially if a minimum of $4 billion in debt is eliminated as a result of Chapter 11.