What happens to the authors, illustrators, copy editors, book formatters, and others who have an-going contracts when a one-person publisher closes down, especially unexpectedly?
I believe a publisher should have a close-down procedure in place should they suddenly pass away or become critically ill. That is, a family member, friend, or attorney should be given in advance the information and power needed to close the doors after informing authors and others of the closure and–importantly–ensuring that all unpaid royalties are paid and that 1099s get sent after the end of the current calendar year. The Small Business Administration has some guidelines here. Most states have similar information available via their secretary of state or other department charged with overseeing businesses of various types.
I found out–quite by accident–that my former publisher whom I’ll identify here as VHP closed down last summer due to the owner/editor’s sudden debilitating illness. Since two of my audiobooks are still under the control of VHP and were still paying royalties, I believe all of VHP’s authors should have received a letter informing them of the closure. It could have been sent by a family member or an attorney and included a statement about royalties still due at the time of the closure and/or after the closure when books are still being purchased at online sellers.
In cases where original contracts were unclear and/or still being written, it would also help authors if reversion rights letters were prepared in advance to be sent via e-mail and USPS mail stating that the company has closed and to confirm that all rights belong to the authors; these letters should include information about the publisher’s contracts with the narrators of audiobooks and when those contracts expire.
I cannot query VHP about any of this because the postal and e-mail addresses were closed down.
If a small publisher accepts your book, it makes sense to find out what will happen to your book if that publisher closes for any reason. Since it’s rather an awkward question, publishers could help their authors by not only making sure close-downs are planned for and also by informing authors that such procedures are in place.
Authors work hard on their books so casting those authors to the winds is not my view of a proper business-shut-down plan for a small company.