Less than a week after releasing a statement in response to allegations of late payment of creators and other debtors, AfterShock Comics has filed for bankruptcy in the state of California. And in the ensuing days, more has come out about what led to this decision, and what the next steps are.
The company, headquartered in Sherman Oaks, California, has filed under chapter 11 of the US Bankruptcy Code, which allows the company to remain in business as it seeks to reorganize and create a plan to repay debtors over time. Under Chapter 11, businesses are also allowed to seek new sources of income, or even borrow money should the court approve.
Rive Gauche Television, AfterShock Comics’ partner in the AfterShock Media television and movie development company, also filed for bankruptcy simultaneously, with creditors including Discovery Networks and AMC. However the biggest creditor is a little-known company named Access Road Capital, which the two companies owe $13+ million to for two loans occuring in 2020 and 2021.
AfterShock Comics and Rive Gauche Television announced a merger in October 2020, although they continued to operate as separate business entities beyond the joint AfterShock Media venture. Although both companies filed for bankruptcy separately, they subsequently applied for, and were granted, joint administration by the court, at the request of Jon Kramer, the central leader (and primary owner) in both companies.
AfterShock’s filing estimates that it owes money to somewhere in the region of 200-999 creditors, with liabilities in the region of $10 million to $50 million. Amongst those creditors are the aforementioned Access Road Capital, as well as printers, distributors, and creators, with many listed in the filing itself. (Reed Exhibitions, the parent company of Popverse, is one of the debtors listed in the form.)
AfterShock's bankruptcy has been in the works for months
The final two pages of the December 19 filing contain a certificate of AfterShock Comics authorizing CEO Jon Kramer to file for Chapter 11 at his discretion. Of particular interest is the date of the document, given as September 12. That's more than two weeks before co-founder/co-owner of the company — and named creditor in the filing — Mike Marts left the company in what he described as the time as an “extremely bittersweet” move; he was replaced in early October by Brian Cunningham.
>AfterShock major staff departures in editorial, publishing, and finance
After Marts' exit and simultaneous to the same announcement of Cunningham’s hiring, IDW veteran Chris Ryall was announced as joining the company in November as a publishing consultant, but Popverse has confirmed he ultimately decided against working with AfterShock.
Marts wasn’t the only AfterShock staffer to leave the company after bankruptcy proceedings began in September; VP of Finance Blake Stocker also quietly left the company in October, it has emerged. His position was not filled, although longtime staffer Lisa Moody has taken control of the company’s finances in the absence of a proper 'VP of Finance,' Popverse believes.
Separately, managing editor Christina Harrington has also left the company in November, although it is unknown if that is related to the company's financial concerns. Her replacement is associate editor Teodoro Leo, with the current editorial team at the publisher consisting solely of Leo and Brian Cunningham.
Who owns AfterShock Comics?
According to court filings obtained by Access Road, Aftershock Comics is owned by four of the five co-founders (Jon Kramer, Lee Kramer, Joe Pruett, Mike Marts), along with angel investor/staffer Jawad Qureshi, the investment fund Atlantic Screen Capital, and comics writer Donny Cates. For more on this, read our article on the AfterShock Comics owners.
What AfterShock is saying publicly about late payments to comic creators
Days prior to the bankruptcy filing after facing social media criticism over late payments, AfterShock released a statement which reads, “The truth of the matter is that the company is addressing late payments as outstanding funds owed to the company come in. There are no non-payments. Everyone who is owed money will be paid. We recognize our obligations and consider creator compensation our number one priority. We apologize for this situation and are making our best efforts to rectify it as quickly as possible.”
AfterShock has not revealed what the "outstanding funds owed to the company" are.
What AfterShock is saying publicly about its bankruptcy filing
Popverse has reached out to AfterShock Comics for comment, and received this in response:
"After much deliberation, AfterShock Comics LLC has voluntarily filed a petition for protection under Chapter 11 of the United States Bankruptcy Code to enable the Company to restructure its senior secured facility as well as being in a position to secure additional financing to continue to operate its business.
"The intent of this decisive action, among other considerations, is to allow the Company to maintain operations in the ordinary course including, but not limited to, paying employees and continuing existing benefits programs,, upholding and following through on commitments to contracted creators, as well as vendors who supply goods and services related to marketing, merchandising and advertising. AfterShock will continue to operate, publish and market comic books and graphic novels to supply to direct market retailers and mass accounts through its distributors in accordance with all federal, state and local guidelines.
"We regret the inconvenience this has caused to those we work with and may cause in the near future. However, we believe that going forward this will allow us to best position the Company for long-term success."
What AfterShock is telling employees privately about the bankruptcy filing
Someone familiar with the situation has told Popverse that AfterShock CEO Jon Kramer has informed employees that the company would be in a better place in January, and the company isn't in any danger of closing.
According to our source, AfterShock's CEO attributes the bankruptcy filing to a pre-emptive move to block a creditor who was going to attempt to take over the company. Popverse has subsequently confirmed that is an accurate version of events, as Access Road Capital - which AfterShock and Rive Gauche owe $13+ million plus to - is seeking full repayment or full ownership of the companies (as they were submitted as collateral).
In late December, AfterShock applied for an emergency motion to be allowed access to funds to pay immediate debts necessary to stay in business. A hearing on that topic is scheduled for January 12.