The publishing industry is facing significant challenges. We just went through a major zeitgeist shift, and reader preferences radically changed. AI also showed up in a big way, so it should be no surprise that several traditional publishers are struggling to adapt. Shawline Publishing, Unbound, Albert Whitman, and even the Publishers Clearing House have all recently declared bankruptcy.
And those are just the big ones. Small presses close all the time.
Listeners often email me asking what to do now that their small, traditional publisher has gone out of business. If you check the comments of this episode’s video on YouTube, I imagine you will see some heartbreaking stories.
My heart goes out to authors caught up in a publisher bankruptcy. The authors did nothing wrong, and yet they are experiencing the worst thing that can happen to a traditionally published author.
Bankruptcy typically means no marketing or promotion, delayed or unpaid royalties, the book going out of stock, and a complex legal battle to reclaim rights. When the legal battle is over, your book contract may be owned by a different publisher you’ve never heard of.
The worst part is that during the bankruptcy, while no one can buy your book, you are often legally barred from indie publishing the book (which is out of stock with the publisher). Your books can get stuck in purgatory, and by the time they emerge, readers have moved on to other books and authors.
It’s not just traditional publishers that are suffering.
- Romance Writers of America (RWA): recently filed for bankruptcy
- Books Inc.: A 174-year-old independent bookstore chain that dates back before the American Civil War filed for bankruptcy
- NaNoWriMo: Declared they are closing a couple of months ago
I’m not saying we are seeing the beginning of a publishing apocalypse. Most traditional publishers will adapt to the new zeitgeist and an AI-powered world and will still be in business next year. I suspect we’ll see more bankruptcies and consolidations, particularly among small publishers. Small publishers are already cash-strapped and are often one miscalculation away from insolvency.
8 Publishing Warning Signs to Look Out For
Let’s talk about warning signs and what to do if you fear your publisher is in trouble.
#1 Delayed or Missed Royalty Payments (Red Flag)
A common refrain in business school was, “Cash is the blood of a business. If you run out, you die.” My accounting professors drilled into our heads the importance of the cash flow statement. As someone who founded my first business when I was a teenager, I can tell you this is 100% correct.
One of the simplest signs of a company’s health is the amount of cash on hand. Some companies are rich in promises. Others are rich in cash. Companies with cash don’t make promises; they make payments.
Late royalty payments are an indicator of cash flow problems. Publishers in financial distress often prioritize creditors with leverage, such as printers, banks, and utilities. Authors have no leverage, and so their royalties go unpaid first. For example, Albert Whitman & Co. faced complaints about delayed royalty payments before filing for Chapter 11 bankruptcy in April 2025.
Delayed royalty payments are the number-one red flag of an impending bankruptcy.
This is true with every kind of company (Fahrenheit story).
#2 Reduced Marketing and Promotion (Red Flag)
The first thing publishers cut when the money runs short is marketing. “We can just make our authors do the marketing,” or so the thinking goes. The problem with this thinking is that traditional authors don’t have the margins, data, or cash flow to effectively market on their own. Sure, authors with their own KDP accounts can profitably advertise, but that is not true with traditional authors.
Struggling publishers often believe they can publish their way out of their financial hole.
These publishers act a bit like gamblers looking for that one big score. “If we could just publish a hit like we did three years ago, we could pay off all our creditors and afford to start advertising again.” Sure, that might happen, but if wishes were fishes, no one would starve.
In reality, books without a marketing budget typically don’t sell. Publishers without money to market find themselves circling the drain, desperately publishing faster and cheaper to try to avoid disaster. Eventually, the money runs out, and they find themselves in bankruptcy court.
Marketing cuts were an early sign of distress for Unbound, a UK-based crowdfunded publisher that entered administration in March 2025, leaving Authors Owed Unpaid Royalties.
#3 Communication Breakdown (Red Flag)
Companies running out of cash cut back on personnel. This can be invisible to authors who don’t have a way of knowing how many hours publishing staff are clocking in. However, you can know how responsive your publisher is. Unresponsiveness to emails, phone calls, or requests for contract updates can signal internal chaos or financial strain.
But it doesn’t take a layoff for the publisher to get swamped. It takes time to calm creditors. Imagine 100 authors emailing you at the same time asking where their royalty checks are.
#4 High Turnover (Yellow Flag)
Sometimes, as a company flames out, they replace their expensive, experienced staff with cheap interns. If the name of your contact at the publisher is constantly changing, that can be a cause for concern.
That said, this is only a yellow flag. Turnover in publishing is naturally pretty high since, even in the best years, publishing jobs don’t pay very well. Marketing people can get a pay increase when they move from publishing to any other sector. It can be hard for publishers to keep talented staff.
That said, layoffs are rarely a sign of fiscal health. Unless the company has a reputation for rank-and-yank, layoffs are a red flag.
Turnover alone is not a cause for great concern, but if combined with other warning signs, you should consider taking action.
#5 Publication Delays (Red Flag)
Frequent delays in releasing new titles or processing manuscripts may indicate operational or financial difficulties. A publisher struggling to maintain production schedules might lack the resources to fulfill commitments, a common issue in financially distressed companies.
Alternatively, it can be a sign of poor management, which is a precursor to financial trouble. All things being equal, poorly managed companies are more likely to go out of business.
#6 Legal Issues (Red Flag)
One bad lawsuit can sink a medium-sized company. Even winning a lawsuit slowly can kill a company. That’s what killed Big Idea, the media company behind VeggieTales. They got caught up in legal trouble and ran out of money before they could win their case.
Keep an ear out for news of lawsuits, financial troubles, or legal challenges. These can be early indicators of deeper problems. We’ll cover these as we find them on Author Update, our publishing news show.
I also recommend following Writer Beware. They do a good job sniffing out struggling publishers.
#7 Shifts in Business Strategy (Yellow Flag)
Sudden changes in business strategy, such as abandoning genres, formats, or markets, may indicate an attempt to mitigate losses.
One thing to look at specifically is imprints closing. Publishers may prune money-losing imprints to stem the bleeding.
This is only a yellow flag. Savvy leadership often prunes ahead of time, and imprints come and go. Just because one imprint failed to find an audience doesn’t mean the whole company is in trouble.
If this is the only warning sign, I wouldn’t worry about it too much. However, if your publisher closes an imprint and they are late on your royalty payment, it’s like the tide suddenly going out. Don’t look for shells in the sand; run for high ground. The tsunami is coming.
#8 Shrinking Advances (Yellow Flag)
Advances for traditional publishers are like peacock plumage. They are an extravagant way of demonstrating they are a healthy potential mate. If the publisher can’t afford to pay big advances, it may be a sign they are running out of money.
Either that or they are not confident in your book selling well. Since your book is a factor here, this is only a yellow flag.
But was your publisher paying $20k advances a few years ago and can only afford $5k advances now? That may be a sign they are running out of money. This becomes a red flag if your sales are steady or growing. It means they are losing money with the other books they are publishing. Either that, or they have failed to keep costs under control.
Remember, with inflation, if your advances haven’t gone up by 25% since 2019, they have actually decreased when you adjust for inflation.
What do you do if you fear financial trouble?
If you detect these warning signs, take the following actions to protect yourself:
Review Your Contract
Examine your publishing contract for clauses related to bankruptcy or insolvency. Some contracts include provisions for termination in such cases, but these may not be enforceable under federal bankruptcy law, as noted by BookContracts.com. Authors need to understand their legal standing and limitations.
Also, Amazon’s bots don’t want a complicated legal argument. They want to see a rights reversion letter.
I built a Patron Tool called Not an Agent. This bot can help you understand your contract in plain English. It can even answer questions about your contract. This tool is not an agent, but it is better than nothing.
Seek Legal Advice
Consult a lawyer experienced in publishing and bankruptcy law. For legal work, I recommend Lloyd Jassin, who I have interviewed on Novel Marketing.
If you have a human literary agent, consult the agent’s advice as well. A good agent will listen to your concerns and do some investigations. A bad agent will disregard your concerns without investigation.
Remember, a struggling publisher must act like everything is fine. Bankruptcy fears can become self-fulfilling if creditors lose confidence. A good investigation is more than just calling up the publisher and asking if everything is OK.
Document Everything
Keep detailed records of all interactions with your publisher, including emails, calls, and agreements. CC your literary agent on all communications if you have one.
This documentation can be critical in disputes or bankruptcy proceedings, as advised by Royalty Reminder. There may be a time in the future when authors with the best documentation go to the front of the line, making them more likely to be paid unpaid royalties.
Request Rights Reversion Now
During bankruptcy, your book could get locked away. It goes out of print, and it’s impossible to get the rights back.
The bankruptcy legal process takes time. During this time, your book may go out of print and be impossible to get back into print until the process is resolved. This will kill the momentum of sales for your book. This is why it is so important to notice the warning signs and do whatever you can to get your rights back before the bankruptcy process starts.
You want to evacuate the flood zone before roads get clogged. As soon as your publisher misses a payment, consider starting the reversion process.
You may be able to negotiate your rights back right now, particularly if the publisher is late on royalty payments.
Not an Agent can review your contract and prepare a rights reversion request letter for you to use as a reference. If you have a human agent, this is something she can help with. Just realize an agent will want you to stay with your publisher rather than revert your rights. The agent gets paid by your publisher’s royalties, not your indie royalties. This is why many agents are hostile to indie publishing.
Just remember, your agent works for you. If the agent sounds like an advocate for the publishing company you are negotiating with, it’s a sign you need a different agent.
My one tip here is to be willing to negotiate with your publisher. Perhaps you can offer to forgive the unpaid royalties for an expedited rights reversion letter. Your publisher may want to sell you unsold inventory at a steep discount. Consider saying yes to this. Freeing up warehouse space will save the publisher money. Cash is more valuable to the publisher than unsold inventory during a cash crunch.
Look at it from the publisher’s perspective. They need cash today so they can stay in business tomorrow. If you offer to buy out your contract, you are offering them something they want.
Getting cash from an author while also reducing warehouse expenses is the kind of deal they can say yes to. In that situation, both parties will benefit by breaking ties.
Explore Alternative Publishing Options
Once you have your rights reversion letter, you have options. You can traditionally publish with a new company, or you can indie publish. That said, most authors in this situation decide to indie publish for a couple of reasons:
- Most publishers are not interested in pre-published books. Most books get most of their sales in the first few months.
- Authors who go indie almost always see revenue increase after a rights reversion.
The author and the potential new publisher have a strong incentive to say no to a publishing deal, but you never know.
It’s not that expensive to republish your book. The editing is done, and depending on your agreement with your publisher, you might have the digital files in hand. Depending on the publisher’s arrangement with the artist, the copyright on the cover may be non-transferable, so you may need a new cover.
But what do you do if your publisher files for bankruptcy before you are able to get your rights reversion letter? Well, for one thing, you don’t take legal advice from a podcaster. Talk with your attorney about your options.
Then, get ready to fight for your rights and your royalties in bankruptcy court. Let’s talk big picture about how bankruptcy works in common law countries.
Understand Bankruptcy
In bankruptcy, the creditors line up in order of priority. Each creditor gets to drink at the punch bowl—some percentage of what they are owed—and then the next creditor in line gets a turn. Eventually, the punch bowl is empty, and the creditors at the back of the line get nothing.
Here is a simplified version of the order of claims:
- Secured creditors (banks with collateral, etc.)
- Priority unsecured claims (employee wages, legal fees, administrative fees, certain taxes)
- General unsecured claims (author royalties, printers, freelancers, vendors)
- Equity holders (owners/shareholders—usually last and often get nothing)
If you read Chapter 11, it’s a lot more complicated than this with first liens and second liens, but from my understanding, in bankruptcy proceedings, authors are considered creditors for unpaid royalties. This means authors are toward the back of the line for the punch bowl.
File a Proof of Claim
During the bankruptcy process, you will have an opportunity to file a proof of claim with the bankruptcy court establishing what is owed. You will likely get a letter from the bankruptcy court that looks like junk mail. It isn’t.
If you throw it away, your likelihood of getting any money back is very low.
This is where it pays to keep good records and to work with a human attorney.
Be Prepared to Work With a New Company
It is also possible that a new company will swoop in and buy the company’s assets, which could include your contract. In that case, you’d be stuck working with a company you never agreed to work with in the first place.
For example, authors who were published by Unbound had their contracts sold to Boundless Publishing Group. Those authors are at the mercy of this new master who also seems to be out of money. It’s a nightmare that Writer Beware describes as putting authors between a rock and a hard place.
One advantage is that no one at this new company has an emotional attachment to your book, and they will likely be willing to negotiate rationally with you to buy your rights back.
Indie Publishing Something New
If your traditional books are stuck in publishing purgatory, consider indie publishing a new book just to give your readers something. Just be careful. Your traditional contract may prevent you from writing a sequel or derivative work. Your publisher may also have the right of first refusal on your next book. But if they are in the middle of bankruptcy, they may be forced to refuse, setting you free.
In the meantime, you can write an amazing stand-alone book. Make a strong statement to your readers and future publishers that just because your publisher is having financial trouble doesn’t mean you are abandoning your writing or readers.
Read the Contract
A lot depends on your publishing contract. So, re-read your contract and make sure to have a literary agent look over any future contracts. If you don’t have an agent, consider talking to Not an Agent. It can explain your contract in plain English and even answer questions about it.
If you are going to go traditional, you should have a real agent. Savvy agents are often the first to smell trouble with publishers in trouble.
If you’ve experienced a publisher bankruptcy, do share your experience in the comments of the video or in the thread below this episode’s post on AuthorMedia.social.
Resources for Authors
- Writer Beware: Offers information on problematic publishers and tips for avoiding scams.
- Royalty Reminder: Provides guidance on monitoring publishers and understanding bankruptcy implications.
For more information, see the following:
- Royalty Reminder: Warning Signs of Publisher Bankruptcy
- WritersWeekly.com: Saving Your Book from a Failing Publisher
- Good e-Reader: Impact of Publisher Bankruptcy on Authors
- Bookcontracts.com: Bankruptcy Clause in Publishing Contracts
- Sidebar Saturdays: Bankrupt Publishers and Authors’ Rights
- Reddit PubTips: What Authors Should Do When Publisher Closes
- Quora: Early Signs of Company Bankruptcy
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