GRAND RAPIDS, Mich. (Christian Examiner) – Nearly 20 years after rumors surfaced that Family Christian Stores (FCS) was headed toward bankruptcy, the nation's largest chain of its type did just that, filing for Chapter 11 this month with a hearing held Feb. 17.
With 266 stores in 36 states, most east of the Mississippi River, FCS is the nation's largest chain of Christian stores. Those stores and about 3,100 employees generated $230 million in gross revenues in 2014, down about $75 million from six years ago.
Its nearest competitor, LifeWay Christian Resources of Nashville, Tennessee, has 185 stores in 29 states.
"It would be inappropriate for LifeWay to comment on this complex legal proceeding," LifeWay spokesman Marty King told Christian Examiner. "However we are certainly praying the Lord will be honored and His kingdom advanced by the outcome."
The recession of 2008 and its lingering effects, the digital revolution, and the company's debt load were factors that led it into an upside-down financial situation, said Chuck Bengochea, FCS president and CEO since last June. Before then he served as president, since 2003, and CEO, since 2006, of The Original Honeybaked Ham.
"This action allows us to stay in business and serve our customers, our associates, our vendors and charities around the world," Bengochea said. "We strive to serve God in all that we do and trust His guidance in all our decisions, especially this very important one."
FCS does not plan to close any stores nor lay off any employees, the CEO said.
Publishers Weekly magazine noted FCS owes HarperCollins Christian Publishers, $7.5 million; Tyndale House, $1.7 million, plus others, including Spring Arbor Distribution, $689,533. The trade publication reported a hefty and unexpected drop in the sale of Christian fiction from 2013 to 2014, partly explaining FCS' woes.
Publishers are among the unsecured creditors whom FCS owes a total of $40 million. Secured creditors are owed another $58 million. Several Christian publishers attended the Feb. 17 bankruptcy hearing.
"Our customers will not see any change in operations during this process," Bengochea said. "After the court approves the sale, we can begin to reinvest in our stores and bring our customers products and services that will help us better fulfill our mission: to glorify God by helping people find, grow, share and celebrate their faith in Christ."
Family Christian Stores was acquired by Atlanta healthcare businessman Rick Jackson, in partnership with fellow Atlanta businessmen Mike Kendrick and Larry Powell, in November 2012.They reorganized the company as a nonprofit—donating the company to Family Christian Ministries—and pledged 100 percent of its profits to charities aiding widows and orphans in the U.S. and abroad, yielding about $300,000 to date, according to the company. In the statement announcing Bengochea's appointment, Jackson called Family Christian "a ministry" and said it is "the first of its kind in the country."
Family Christian Ministries also owns two other companies:
-- iDisciple is an online source with more than 85,000 pieces of digital Christian content—Christian inspiration, messages, sermons and music—from 185 leading authors, speakers and ministries.
-- Giving Films is a movie production company that develops Christian movies such as last year's Heaven is for Real. These two companies are not part of the restructuring.
Family Christian Stores started in 1931 as Zondervan Publishing.