Suncoast is returning all of its manga inventory to supplier Ingram Book Company and exiting the category, at least for now.  Parent company Musicland filed for Chapter 11 bankruptcy (reorganization) in federal court Thursday.  The company has obtained $75 million in debtor-in-possession financing from its existing bank group to help it through the reorganization. 


After announcing that it was closing its Media Play chain (see 'RIP Media Play'), Musicland had attempted to muscle its creditors into deferring a portion of their receivables or taking equity instead (see 'Musicland Asking for Creditor Relief'), and initially shipments of new product appeared to be flowing normally from companies such as ADV and Tokyopop (see 'Musicland Blowback?).  Viz Media Director of Marketing Anthony Jiwa also told ICv2 that new and replenishment orders were shipped to the company through the holidays, including new releases such as Hikaru no Go and Kamikaze Girls. 


But by this week, Jiwa told us, Viz was shipping neither anime (which in the case of Viz is distributed to Musicland through Ventura Distribution) nor manga to Musicland.  Jiwa also said that Viz had been informed that Musicland was exiting the manga category for 2006. 


Ingram Book Company CEO Jim Chandler confirmed that all manga inventory was being returned.  'Ingram has been the category manager for the book category,' he said of the Musicland relationship.  'We are in the process of unwinding that as we speak.'  Although disappointed at the situation, it was not entirely unexpected.  'We entered in knowing it was shaky,' he said. 'They'd had trouble off and on over the last ten years.'  Chandler confirmed that as we reported earlier, Ingram Book Company carries all of the receivable risk in the relationship.  


The run-up to the bankruptcy has been painful for Musicland suppliers.  One told us that 'everybody' had checks bounce (or technically, had payment stopped on checks) in December.  And the Media Play shutdown is also having secondary effects:  Musicland has sold the Media Play DVD inventory to liquidators, who are now spreading it throughout the industry.  Anime producers are concerned that it will find its way back to them as returns from customers that buy it at steep discounts, or that it will be sold at retail at reduced prices, sopping up demand for full-price merchandise. 


There was no answer at the telephone number provided on the Musicland Website for press inquiries.  A Suncoast store manager confirmed that he was shipping back all of his manga inventory, but he also said that managers were told in a conference call that the move might not be permanent if future supply could be obtained. 


For more on the impact of the Musicland situation, see 'Musicland Blowback, Part 2.'