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October 16, 2024

Shawline Group enters liquidation

Shawline Publishing Group Pty Ltd (Shawline) and Readalot Magazine Pty Ltd (Readalot) (together, the Shawline Group) are now in liquidation. The members of these companies have resolved that they be wound up and Adrian Hunter & Robyn Erskine of Brooke Bird Pty Ltd have been appointed liquidators. 

We know that many authors have signed publishing contracts with Shawline and Readalot and will be alarmed and dismayed by this news. Many authors may have lost substantial sums of money after being promised certain services and paying significant fees for those services, and others may be concerned about what this means for their published titles.      

Affected authors should already have heard from the liquidators. If you haven’t, we suggest you contact the liquidators, and inform them of your contract with Shawline or Readalot. Contact details for the liquidators can be found on the ASIC website. 

You may wish to read more information on liquidation, the role and obligations of the liquidator, and your rights as a creditor, on the ASIC website or through ASIC’s Information Sheet 45: Liquidation: A guide for creditors.

This article contains general information only. We suggest you direct specific questions about your circumstances to the liquidator and seek legal assistance if needed.

What will happen to Shawline and Readalot’s contracts with authors?

It is important for all authors to check the terms of their Shawline and Readalot Agreements. We are aware that multiple versions of these contracts were issued over the years and the terms varied.

We suggest you first ascertain whether:

  1. Your contract automatically terminates upon Shawline or Readalot’s liquidation; or
  2. If there is no automatic termination, what steps you now need to undertake to terminate your contract, for example:
    1. You may have an automatic right to terminate by giving written notice upon liquidation (until you give that written notice, your contract may still be considered “live”).
    2. You may be able to terminate for breach of contract, depending on your circumstances, because you failed to receive services promised or failed to receive royalties due.

Alternatively, the liquidator may terminate your contracts, or the companies may be wound up and deregistered by the liquidator, at which time the companies cease to exist. With no existing counterparty, the contract is at an end. 

Unless your contract automatically terminates upon liquidation, then all of the company’s contracts are still “live” and are considered assets of the Shawline Group until terminated. Having said that, it is good practice for authors to formally issue a notice of termination of the contract even if the termination is “automatic”.

Who owns the “print ready files”?

Published Shawline authors have rightly expressed concern over who owns the “print ready” files of their “Work”. This remains a live issue. We encourage authors to clarify this with the liquidator.

Unfortunately, liquidation of a company is not a quick process and you may have to wait a while before everything is resolved. The liquidator has asked for patience during this time.

Payment to creditors

An astounding 600 titles are affected and the authors have been added to the liquidator’s list of unsecured creditors. The liquidator has confirmed that Shawline’s operations have ceased and that no further work is able to be undertaken in relation to works partly completed. There is no stock to be sold. As unsecured creditors, we consider it unlikely that authors will recover any money. 

Despite this, we encourage authors to lodge their claims for monies owed. It is likely that authors will have to provide the liquidator with a “Proof of Debt”. A Proof of Debt is a prescribed form to be completed by creditors at the liquidator’s request, setting out details of their claim against the company, including how the debt arose and the amount claimed.

You are a creditor if the Shawline Group owes you money because you are owed royalty payments which are outstanding, or because you have paid for goods or services (including advertising) that you have not received. This is important because it informs the order of priority for the distribution of funds (if any). 

Once the liquidators have realised all the assets of the Shawline Group, they will distribute funds in a set order: 

  1. firstly, to cover the costs and expenses of the liquidation, including liquidators’ fees;
  2. secondly, to pay priority creditors, such as employees; and 
  3. thirdly, to pay unsecured creditors (i.e. authors of the Shawline Group).

The liquidator has a number of powers including:

  1. investigating  and recovering certain payments that Shawline or Readalot may have made to individual creditors in the 6 months prior to liquidation. These payments are known as “unfair preferences” and can be “clawed back” on behalf of all creditors to add to the funds for distribution; and
  2. inquiring into the failure of the Shawline Group and possible offences by people involved with the company, and reporting those findings to ASIC. 

As a creditor, authors have rights to request the liquidator provide information, and the right to inform the liquidator about information they know which is relevant to the Shawline Group’s liquidation. 

We are highly aware of the distress among many of the affected authors. We take this opportunity to encourage all members to seek advice before signing any publishing contract, particularly where it requires a financial contribution from you. The terms set out in your publishing agreement determine your rights and future income for years after you’ve signed. All publishing service providers should be evaluated to ensure their services and fees are transparent and competitive.

Our specialist low-cost legal service, Authors Legal, is invaluable for understanding your risk and negotiating fair terms with publishing providers. We also offer free information about the red flags to watch out for in our self-publishing FAQs.

If you are affected by the liquidation of Shawline or Readalot and you need help navigating next steps, please contact us via the Member Advice Service. 

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