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CRIV Gram - 3/6/03
UPDATE ON ROWECOM / FAXON
Thanks to Janice Anderson for preparing this information and update.
The proportion of law libraries in the group of customers directly affected by the recent demise of RoweCom is not large, but for each of those, the impact can be huge, and there are lessons for all in the risks involved when a library makes payment to a company in advance for a service or product to be received later.
Faxon was a company with a history of decades of quality service. In 1999, Faxon joined RoweCom, and in 2001 RoweCom was acquired by divine, inc. In late December, 2002, libraries that had remained with Faxon/ RoweCom through some rocky times learned that divine had decided not to support the RoweCom subscription agent business any longer. It was learned that RoweCom did not forward the money from many libraries to the publishers to cover the costs of their subscriptions. The largest single creditors were the National Institute of Health Library ($2.4 m.) and Virginia Tech ($1.6 m.) An ad hoc committee of libraries and publishers formed to attempt to facilitate negotiations in ways that would protect their interests. A number of publishers agreed to grace libraries while investigations and negotiations took place.
Negotiations with Swets Blackwell for the purchase of RoweCom fell through and in January, Ebsco Industries, which had been negotiating for just the European operations of RoweCom, signed a letter of intent to purchase the entire business.
RoweCom filed for bankruptcy on Jan. 27, in U.S. Bankruptcy Court, District of Massachusetts, Eastern Division. The same day, RoweCom filed a 14-count lawsuit in the same court against its parent company, alleging that divine had made "fraudulent transfers" of over $73.7 million of RoweCom funds and had looted the company. By the end of February, divine had filed suit for bankruptcy in the same court.
On March 5, Ebsco announced that it had executed definitive agreements to acquire the U.S. operations of RoweCom. The acquisition is contingent upon U.S. Bankruptcy Court approval, the successful closure by Ebsco of its acquisition of RoweCom's European operations, and the support of publishers representing at least 50% of the aggregate monetary amount paid by customers to RoweCom that was not subsequently forwarded to publishers on behalf of these customers. Letters have been sent to publishers and to libraries seeking their participation, with a requested return date of March 15. Libraries are being asked to exchange their claim on the RoweCom estate to the extent that publishers agree to supply issues. Publishers are to receive the equivalent of the customer's claims.
Those wishing to see some of the relevant legal documentation can go to the web site of Kurtz Carson Consultants, at <http://www.kccllc.net/> where there is a section dealing with the RoweCom bankruptcy. Those whose libraries are RoweCom creditors can get more information, and exchange email messages with other creditors, by virtue of joining the rowecomcreditors group at http://groups.yahoo.com/.
Ann Jeter
AALL Committee on Relations with Information Vendors (CRIV)
Jackson Walker LLP
901 Main St. Suite 6000
Dallas, TX 75202
(214)953-6038
ajeter@jw.com <mailto:ajeter@jw.com>
The purpose of this posting is to provide information and should not be considered an endorsement of a particular company or its products by CRIV or AALL.
CRIVGrams and CRIV Alerts are issued by the AALL Committee on Relations with Information Vendors (CRIV) and are intended to inform librarians about issues concerning publishers. Questions about CRIVGrams and Alerts generally should be addressed to Carol Rogers, CRIV Chair. Questions about matter presented in a specific message should be addressed to the contact individual listed in the body of the announcement. An archive of CRIVGrams and CRIV Alerts is available in CRIV Page, the committee's Web site at <http://www.aallnet.org/committee/criv>.
Ann Jeter
Mgr. of Information Services
Jackson Walker LLP
901 Main St. Suite 6000
Dallas, TX 75202
Phone: (214)953-6038
Fax: (214)953-5822
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