Last March Houghton Mifflin’s parent company, staggering under a $7 billion debt load resulting from an ill-timed leveraged acquisition, put the trade book publisher up for sale (see Psst…Wanna Buy a Publisher Cheap?), but subsequently decided to see if it could restructure its finances. It seemed like a good idea in view of an annual debt service of $500 million.

Now, Michael Cader reports in Publishers Lunch that EMPG, Houghton’s owner, is going to try another restructuring “that would wipe out equity-holders entirely and turn the company over to its secured lenders.” Where we come from that’s what we call bankruptcy.

And yet, Cader notes, this calamity “could in a perverse way be the best thing for the company, which appears stable as an ongoing operation absent the unrealistic level of debt taken on to build the conglomerate in the first place.” The Italics are mine: to put it another way, EMPG and Houghton are sound operations except for a gambling debt so colossal that it will wipe out those foolish enough to have bought into it and threaten to ruin the bank that funded this misadventure. “These developments have no adverse effect on our day-to-day operations, on our employees, or on the nature and quality of the service we provide to our customers and business partners,” an EMPG statement says. I thought that one was worth italicizing too. It might have been spoken by the wine steward on the Titanic.

A Viennese general whose troops were surrounded is said to have reported to his commanding officer that his situation was “desperate but not serious.” Thus does Houghton bravely carry on even as its owner lets loose the wrecking ball.

Richard Curtis