Close to 20 people milled about the Tattered Cover bookstore’s location in McGregor Square on Monday afternoon, some standing before shelves flipping through books while others parked in the shop’s cushioned chairs to read for a while.

Among them was Henry Koehler. Although only back in Denver for a brief visit, Koehler lived in the Mile High City for close to 20 years before moving away. His parents took him to Tattered Cover often, he said. The bookstore was important to them, and he stopped in on his trip back.

Koehler had not heard that the independent bookstore chain filed for Chapter 11 bankruptcy earlier that day, he said, a look of surprise washing over his face at the news.

He had noticed the location was quiet, and that the art section seemed thin, he said.

“I remember it being a pretty bustling place,” he said.

Koehler hopes the chain pulls through as it navigates the bankruptcy process and closes three locations — the McGregor Square shop included.

“Man, uphill battle,” he said, adding that retailers in general seem to be struggling and shutting down during current economic conditions. “I hope they figure it out.”

Tattered Cover’s filing for Chapter 11 bankruptcy protection comes three years after the iconic local business was sold to an investment group.

The bankruptcy filing on Monday said Tattered Cover owes its creditors, numbering in the hundreds, between $1 million and $10 million. The company listed its assets in the same broad range.

Tattered Cover, which opened in 1971, has seven locations, according to its webpage. The company will attempt to reorganize and remain in business during the bankruptcy process.

Tattered Cover plans to close its stores Denver’s McGregor Square, Westminster and Colorado Springs. The closures will begin this month and wrap up in November.

The store is eliminating at least 27 of its 103 staff positions and is developing severance packages, according to a news release. Some employees might be kept on for temporary, seasonal positions in the upcoming holiday season.

Employees at the McGregor Square location directed The Denver Gazette to a company spokesperson and declined comment. The spokesperson could not be immediately reached for comment by press time Monday.

Tattered Cover’s CEO Brad Dempsey said in a news release that filing for Chapter 11 bankruptcy will allow the bookstore “to regain our financial footing.”

“Our objective is to put Tattered Cover on a smaller, more modern and financially sustainable platform that will ensure our ability to serve Colorado readers for many more decades,” Dempsey said. “Restructuring for long-term viability requires managers to make very difficult business decisions that affect people and business partners, and we intend to do what we can to minimize these impacts. We’re thankful for the professionalism and dedication of our management and staff in helping Tattered Cover transition to its next successful era.”

The news release announcing the petition for bankruptcy said Chapter 11 bankruptcy allows it to access $1 million in debtor-in-possession financing to secure critical inventory for the 2023 holiday season. The announcement also placed some blame for Tattered Cover’s financial woes on the pandemic.

The bookstore chain expanded despite economic headwinds after its 2020 acquisition by Bended Page, LLC, an investment group led by David Back, Alan Frosh and Kwame Spearman of Denver.

Spearman, who served as Tattered Cover’s CEO until April, told Denverite in early 2022 that growth was how the bookseller would avoid bankruptcy.

“When we bought Tattered Cover, the organization was headed towards bankruptcy,” Spearman told Denverite. “The amount of revenue from our stores was not enough to support the entire organization. To secure a future for our brand and avoid bankruptcy, we had two options — to grow or dramatically cut costs with company-wide layoffs. We chose to grow.”

Spearman stepped down as CEO in April after rankling some customers with his hardline positions on homelessness and immigration during a short-lived run for Denver mayor.

In announcing his departure, Spearman said he needed to separate his politics from Tattered Cover. Spearman left the board of directors but remained an investor. Spearman is now running for the Denver School Board.

In July, Tattered Cover hired bankruptcy attorney and former Republican congressional candidate Dempsey as CEO. Dempsey said at the time that his goal was to “remedy” the company’s “immediate financial obstacles.”

Prior to the 2020 private sale, Tattered Cover announced it would leave its 27-year flagship location in LoDo for a new store at McGregor Square.

In January 2022, Tattered Cover opened a new location in Westminster. The company opened its first location outside the Denver metro area, in Colorado Springs, in June 2022.

Tattered Cover was led for decades by Joyce Meskis, who gained national recognition as a fierce defender of the First Amendment and independent booksellers. She died in late 2022.

In 2015, Meskis sold Tattered Cover to Len Vlahos and Kristen Gilligan, who received nationwide derision for their 2020 decision to declare neutrality, not support, regarding the Black Lives Matter movement. Vlahos and Gilligan sold the company to the investment group months later.

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