When Small Publishers Go Bankrupt

Jessica Faust over at Bookends wrote about what to do if your book publisher goes bankrupt in The Fall of a Publisher. It's excellent advice. I suggest you read the whole thing, but here's a except of the most important information:

The first thing you need to do is, if you are under contract, officially terminate the agreement. Demand that rights be reverted in a letter sent by you, your lawyer, or your agent via certified mail. Then you need to wait. Yes, I’m afraid you’ll need to wait and see how things play out a little. No publisher is going to want to touch a book that might get them into legal entanglements, so changing a title or a few character names is risky business for you, for the publisher, and for your career.

In the comments section of the post, Chumplet wrote:

Many of the reputable small presses are adding a clause in the contract that states if there is a bankruptcy or if the publisher ceases operations, the rights immediately return to the author. I'm sure there's still a bit of waltzing involved before the author is free of the contract, but it's a start.

Going through this is not a happy thought to contemplate, but now authors have some good advice on how to handle the situation professionally.