Weeks after independent publisher AfterShock Comics filed for bankruptcy, the situation continues to evolve with a hearing scheduled in California courts for later this week aimed at ensuring that the company can afford to stay in business in the short term.
Just days after both AfterShock Comics and its sibling company Rive Gauche filed for Chapter 11 bankruptcy, the two companies filed a motion seeking joint administration of their bankruptcies, arguing that their interdependency as two halves of AfterShock Media made a combined administration the smartest choice. That joint administration was granted, with Judge Martin R. Barash overseeing both cases.
AfterShock is asking the courts to spend money to keep the lights on
On December 21, a day after asking for joint administration, an emergency motion was filed with the court asking for interim authorization for AfterShock Media to use existing cash collateral to maintain operations, as well as a final decision as to whether the company would be allowed to continue to access holding funds moving forward while in Chapter 11 proceedings.
“In connection with the operation of their businesses, the Debtors pay various expenses for, among other things, payroll, comic distributors, producers of content in the RGTV Library, shipping, taxes, printing, IP Development, and other costs associated with operating ASM’s three business lines. The Debtors need immediate and ongoing use of cash collateral to pay such expenses,” the motion explained. “In the event that the Debtors are not able to timely pay such expenses, including honoring pre-petition checks and paying wages and commissions earned immediately prior to the bankruptcy filing, as well as post-petition wages and commissions, the Debtors will likely face business interruptions, and an operational shutdown, which would be detrimental to all creditors and negatively impact the going-concern value of the ASM enterprise.”
To put things more bluntly, AfterShock is arguing that it requires funds in the short term to pay for the actual production and distribution of its core product. Look at the list above, and see that it includes printing and shipping, as well as “comic distributors.” (Also note that, while it specifically names “producers of content in the RGTV Library,” it doesn’t call out comic creators as a priority for payment… unless, of course, that falls under “IP Development.”) This, of course, makes sense — how else can AfterShock make money, if it doesn’t sell comics, and it can’t sell comics that don’t exist — but it’s worth noting the number of companies involved in this process AfterShock currently owes a lot of money to.
In addition to the above motion, on the same day, a second emergency motion was filed, asking the court to authorize use of funds to pay “pre-petition” employee wages and commissions, suggesting that staff had been working unpaid for a period at time of filing. The court has set a hearing date of January 12 to hear the motions.
Popverse has reached out to AfterShock for comment. Expect updates as more information becomes available.