Family Tree Magazine and Family Tree University Files Bankruptcy

Posted on March 19, 2019 by Roberta Estes

Earlier today, after I said the words, “what the heck else can go wrong,” apparently the Universe took that as a challenge.

I opened the mail and inside was a bankruptcy notification that F&W Media had filed bankruptcy. While you probably won’t recognize that name, you will recognize Family Tree Magazine and Family Tree University with their online classes, conferences and huge, huge bookstore. Here’s the link, but this is NOT an affiliate link, just so you know. To be very clear, I’m not recommending that you purchase anything. (Please note that these companies, in spite of similar-sounding names are NOT in any way affiliated with Family Tree DNA.)

If you look at who is teaching at the Family Tree University upcoming Virtual Conference this weekend, you’ll see names you recognize. If you look at the bookstore, it’s a who’s who of authors within our community. It’s also heavily weighted towards genetic genealogy.

Those people aren’t being paid. Not now, and maybe never.

Bankruptcy Notification

This is the lovely howdy-do that I and every other instructor with unpaid classes and most (if not all) authors received in the mail today.

You can click to enlarge.

What Does This Mean?

This notification means that F&W Media applied in court about a week ago for protection FROM their creditors. The court was provided with a list of creditors 542 pages in length, with 30 names per page, for a whopping total of 16,260 people or companies that they owe money.

Almost all of those people you see on their website are creditors meaning we have sent them an invoice for recent services, such as the upcoming conference, or they owe us money and haven’t paid it. In some cases, a LOT of money.

While I’m angry, I’m “only owed” hundreds of dollars as compared to others who are owed thousands.

In the case of the Virtual Conference scheduled this upcoming weekend, my sessions were due to be delivered to F&M media on February 15^th. I did and subsequently sent them an invoice on February 19^th for those sessions. Instead of a check, I received this bankruptcy notification. Actually, that’s probably a good thing, because some of the checks they did send to people bounced, causing the recipients overdraft fees and additional headaches, especially if they wrote checks themselves on the deposited funds.

However, Family Tree University is continuing to present the conference this weekend utilizing the work of the people who will probably never receive payment.

How Does Bankruptcy Work?

I’m not a lawyer, but I have been a creditor in two prior bankruptcies. Obviously, bankruptcy is filed when the company has no possibility of paying their bills, so they seek protection from their creditors under the law and direction of how to distribute the money they do have among those creditors.

After the bankruptcy suit is filed, any debt before the filing is now within the bankruptcy court meaning managed by the court. The company may be able to continue business, starting over debt-free, in essence from that day forward. The court decides.

Whether, as a contractor who just got jilted, you want to continue to work for them and believe that the company can and will pay you for future work is another matter. To say that the trust has been eroded would be the understatement of the year.

In this bankruptcy filing, the book division may be sold off, which may provide future relief for the authors. I say “future relief,” meaning that they may be paid for the books sold in the future. Whether they are paid anything at all for the amount of money they are currently owed for royalties or for the books already sold is up to the judge.

To have a PRAYER of collecting anything, the creditors (meaning me and the others) must file additional paperwork with the court in Delaware by June 7^th.

Then, the court will decide what debts are legitimate and will divide the assets of the company among the approved creditors. Creditors with secured debts are paid in full first.

In personal debt, a secured debt means that the debt is secured by something tangible, like your house or car. If you don’t pay the bill, that item can be sold to liquidate the debt.

Credit cards are examples of unsecured debt which is one reason why the interest rates are so much higher. So is the risk to the creditor of not being paid.

In corporate debt, tangible assets could be land, buildings or things like a book division that has residual value and is not losing money.

Next, the unsecured debt is paid in the order that the judge deems fit.

Here’s what I know for sure – in the two cases I previously was involved with as a creditor, I jumped through a lot of hoops and received absolutely not one red cent. Zero, zip, zilch. Nada.

In one case, the final disposition took years and I was owed more than $10,000, depending on how you count – meaning whether or not you include interest from when the debt was originally incurred. If you count from the beginning when the debt was incurred to the miserable end, that total approached $20,000, with interest included.

Poorly Handled

This situation was very poorly handled by F&W Media. They clearly knew there were having huge issues, yet they proceeded, signing contracts they clearly knew they could not honor, taking advantage of the giving spirit of the genealogical community. That’s bad faith, pure and simple.

The leaders of this community already contribute a lot. What we are paid for each session is almost a token amount, but many of us provide these and other similar sessions as a way of giving back to the community in a medium that can reach the highest number of people. That’s in addition to contributing things like this blog that is free for everyone.

Every professional that I can think of does similar things utilizing different technologies and contributes in many ways.

Shock Waves

This bankruptcy, in part because of the massive scale and the thousands of dollars owed to some people just before tax time has sent shock waves through the professional levels of the genealogical community.

No one can afford to take a “pay check” hit of, in some cases, thousands of dollars.

We feel betrayed, and at the same time, we feel sorry for the employees we’ve worked with for years. Most of them are gone now too, without a peep or a goodbye, before we knew. I hope they land on their collective feet and I certainly want to believe they had no direct knowledge that F&W was taking advantage of us.

At least they qualify for unemployment. We don’t.

We Need to Have a Discussion

After the shock of this situation wears off, after we’ve had a chance to deal with the ramifications, and after tax season when we’re all insane, especially those who were counting on those funds owed to pay their corporate taxes, we, the community, need to have a discussion about education and payment of professionals for their services.

While I understand that we all would like for everything to be free – it isn’t. Education isn’t free and neither is continuing education required for us to stay on top of what’s happening in this industry. Every. Single. Day.

Those of us who work professionally in this field incur the costs of incorporation, a CPA to help with our corporate taxes and filings, sometimes lawyers, the cost of computer equipment, software, subscriptions, blogs, websites, servers, ISPs, travel and education. We also don’t have paid vacation, sick time, insurance or any other benefits, AND we pay all of our social security contribution (including the 7% paid by employers) as well as required federal and state unemployment tax, which we, as business owners, can never collect.

If you think, “what fun to go to conferences,” let me just say that I paid about $2500 to attend RootsTech which meant that I substituted RootsTech for paid client work for roughly a week. It was not an unpaid vacation. I attended 2 classes, 2 keynotes plus one that I left early, and 2 lunches. I went to the FHL for parts of 2 days, so about a day in total for my own research. That’s it.

What was I doing the rest of the time for those 7 days? Contributing one way or another. Unpaid. Gratis. Including the class where I prepared the session and substituted for another speaker who became ill. That’s what genealogists do for each other.

Here’s a surprise. At least one speaker got to attend NO sessions at all. Not a single one.

This isn’t a pity party, it’s the reality that people never see behind owning a business. The last thing we need is to be unpaid, especially when others are making money as a result of those very efforts that we’re not being paid for. That’s adding insult to injury.

Consider that it takes approximately 2 to 3 DAYS, minimally, to produce a quality one-hour webinar or presentation. The pay from F&W Media was equal to approximately 1.5 HOURS of privately billed client work, so you’ll understand the outrage that we’re not even going to be paid that amount now AND the virtual conference that customers are paying to attend that includes our unpaid material is still going forward this coming weekend.

And just saying, this might not be a good time to say, “But you get to work for yourself,” either. 😊

All of the professionals that I know personally want to teach and provide services, but we want to be fairly compensated and paid. Perhaps contracts in this industry need to read differently and contain clauses that specifically address this type of situation. Maybe contracts need to contain clauses that state that the material can’t be utilized until it’s paid for and address bankruptcy specifically – and perhaps we all need to require that verbiage be included in every contract we sign.

I’m not sure how to address the issues of royalties and book sales, but I do know that we have a lot of bright people in this community and we can collectively figure out a way to protect ourselves from something like this happening again.

Once burned, twice shy.

What Can You Do?

Genealogical education, in particular for genetic genealogy, is absolutely crucial.

I hope you’ll support the authors and educators who give us so much by purchasing their books, webinars, subscriptions, products and services that they sell through OTHER outlets and avenues. If you’re buying anything, click through their (our) affiliate links. I won’t cost you anything and it provides a little something to them.

For blogs especially, affiliate links keep the lights on and the free articles coming.

If you’re purchasing a book, the author may well sell the book personally or can tell you the most advantageous methodology for purchasing. Check their website or drop them a line.

I know they won’t ask on behalf of themselves, so I am. The F&W bankruptcy is hurting a lot of people right now.

Thank you for your support as we struggle through this.

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