My heart aches for authors who see their dreams (I’m published! Wheee!) crushed when a pub folds. And except for the case of Triskelion (sour grapes ahead), I feel for the publishers and employees if they acted in good faith and simply couldn’t make it work. In this case, Twilight Fantasies lasted less than a year.
There will be lots of “I knew it, these were the signs, etc.” floating around regarding another defunct epub, but the truth is that at one point, Samhain was small, Loose ID was new, and long ago in another galaxy, Ellora’s Cave was a twinkle in someone’s eye.
Here’s the only thing I might recommend to someone getting started. The only guaranteed way to ensure you don’t go down with the ship. SEND A NEW EPUBLISHER ONLY ONE OF YOUR BOOKS. Spread the wealth. You get tied up in bankruptcy court? Nope, not you. You’ve seen too much of this lately, and you’re not going to bite. You’re going to hedge your bets (your beautiful babies, the works you slaved over), and you’re going to be wise. You’ll understand that while this could happen to any author, any company, at any time, you’re going to do your best to avoid losing all your works.
Companies are less and less interested in acquiring previously published works. I’m damned lucky I got out of Triskelion when I did, and I learned a HUGE lesson in watching my colleagues get hurt. Don’t give a brand new publisher a book you can’t afford to lose. That sounds harsh. Read more at Heather Holland’s blog.