bearilou - unfortunately, that's the nature of publishing.
And it's also why people here and other places harp on "don't sign with a brand new company until they've established themselves" and "have you ever seen their books in a book store?" for those that promise actual books (not e-books).
It's because a book can get tied up in something like this. And even though they may be on the side of angels, authors are the ones who will bear the majority of the pain because we're the ones who produce the product.
Think of it as if you ran a small coffee farm. You've sent your beans to a big corporation to make this season's coffee. Then they go bankrupt and all the money disappears. You're not going to get paid (there's no money) and you're not going to get the beans back (they've already been processed). You can sue, but lawyers are expensive and there's probably no money to get anyway.
So, you go back and plant more beans and hope the next manufacturer is more mature and less likely to have horrible business practices.
Sure, self-publishing is always an option for someone who's up for being a merchant/publisher/promoter/web designer/inventory specialist/accountant. Me? I'm a writer. I found out doing my self-published comic that I really don't like being a publisher, because all the time I was doing publishing stuff, I didn't have time to write and that's what I really like.
So, if you don't want to do all that, then a writer need publishers.
So then, it's up to the writer to find the best publisher they can. Start at the top with any story and then work your way down to the small press and then to the micro presses and if worse comes to worst, shelf that project and start another one. (Which a writer should have been developing while they were shopping the first one around anyway, right? *grin*)
Coffee anyone? *grin*
