Rising From the Ashes -- Koen-Levy Book Wholesalers

On October 18, some two months after Koen Book Distributors ended operations, Levy Home Entertainment announced that it had acquired certain Koen assets and would be forming a new business called Koen-Levy Book Wholesalers, LLC. The new entity will be located in the former Koen buildings in Moorestown, New Jersey. Levy Home Entertainment is a book distributor that services retail chain accounts in the 48 continental states. Bob Koen, formerly of Koen Book Distributors, will be the general manager of the new wholesaler.

According to a statement from Howard Reese, president and CEO of Levy Home Entertainment, the plan is for Koen-Levy to "support LHE's current customer base as do all of our distribution centers and ... [to be] a regional supplier to the bookstore channel in the Northeast and Mid-Atlantic regions of the country."

Bob Koen told BTW that Reese and Steve Carlson, Levy's CFO, first contacted him "in early July" -- around the time his company had declared Chapter 11 -- regarding the prospect of forming a business relationship to help support current Levy retailers. "They ... heard about our problems," Koen said, "and thought there might be a way to work things out."

After Koen Book Distributors filed for bankruptcy on July 10, Koen announced his intention to resolve the company's difficulties and to keep the business going. However, in August in an e-mail to customers, he stated his decision to close: "The books didn't come in fast enough for us to get sales to a profitable level for the bankruptcy court to keep us going."

Levy Home Entertainment has purchased warehouse equipment, office equipment, and intellectual property (e.g., sales history) from Koen Book Distributors, but it has not purchased the receivables, nor assumed the liabilities of the liquidating company. Koen noted that he owns and pays mortgages on the two buildings that housed his distribution business.

According to Koen, Levy Home Entertainment maintains between 6,000 and 10,000 titles and provides service to chain retailers, such as Target and Best Buy. Koen maintained about 60,000 titles and made its name by servicing the independent bookstore community.

The hope is that the new Koen-Levy will be operational in two to three weeks, said Koen. He added that several former Koen staff members, including Sheila Kowalski (as head of merchandising), Jim Di Miero (to head up the sales and marketing division), and "almost all the sales people," would be joining Koen-Levy.

Despite Koen's bankruptcy filing having occurred just a few months ago, and wholesaling being renowned as a risky business venture, Koen is confident that Koen-Levy won't suffer the same fate as Koen. "The account functions will be done in Chicago instead of here," he explained. "We're going to be lean and mean -- or as I like to say, lean and nice -- and hopefully keep it that way."

Koen said the plan is to go after Koen Book Distributor's previous customer base, and the sales team has already been in contact with some former bookseller customers. The company "will get a lot of business from Levy's side," he said.

Of those former customers contacted about Koen-Levy, Koen said, "Nine out of 10 ... are happy" with the news. --David Grogan