Authors were informed of the decision in an email from Boundless CEO Archna Sharma, who took the reins of Unbound shortly before its administration in a doomed attempt to revive the publisher’s fortunes.

Newco Boundless, which will operate like a traditional publisher, will be unable to pay historic royalties unless it “survives and thrives”, the email read.

“This decision, while incredibly difficult, reflects the reality of the company’s cash position. We simply do not have the cash at the moment to make further historic goodwill payments. What cash we have is focused on paying the salaries of our employees, ensuring our current committed publishing programme is a success, and ensuring all royalties arising from the inception of this new company are paid on time,” Sharma said.

She added: "We are acutely aware of the disappointment this causes for authors and partners, and for the delayed timing of this message as we were trying until the last minute to avoid this outcome. We do not take these delays lightly. This is not a matter of choice, but of survival."

Unbound’s administrator’s report, from Allister Manson and Charles Turner of Opus Restructuring, showed an estimated total deficiency for unsecured creditors of about £2.4m. Of that, Unbound owed a collective £657,000 to 238 authors and agents who were listed as creditors. Website customers – of which nearly 8,000 were listed – were owed £391,000.

Unbound former director, John Mitchinson, set up Boundless with Sharma – but on 28 May he left the new venture, and is no longer listed as a person with significant control over Boundless. According to The Bookseller, he will not be drawing any funds from the company.

Sharma has brought in Ronjon Nag, a Stanford University professor, as a new director in Mitchinson’s place. She continues to forgo her salary, as Nag will.

She added: “We are putting together a more efficient team; we are forming new boards of directors and advisers; and I am engaged in an additional round of fundraising. In fact, the only way that we could make even the first set of payments under the payment plan was because our current investors were willing to fund the newly formed company. 

“I cannot emphasise enough that we can pay you the goodwill payments covering Unbound’s historic liabilities only if Boundless Publishing Group survives and thrives."

Author Tom Cox, who had published seven books with Unbound, has already taken back the rights to his books in order to sell as many as he can by himself.

Writing to followers on Facebook, he said unpaid royalties owed to him by Unbound – royalties that Boundless said it would honour, even as it disclaimed legal responsibility to do so – amounted to over £20,000.

“I evangelised about this publisher for years, about what I believed they stood for, as my experience of working with them became more and more disappointing, stressful and damaging to my mental and physical health. What a trusting fool I was,” he said.

“Without Substack, without the books I've broken my back selling, giving away and posting myself in the last three months, I would be utterly screwed right now. Even worse, this latest blow has happened on the same week that out of the blue my partner and I found out that, in just two months, our landlady is kicking us out of the house we [r]ent.”

He added: “If I wasn't so fucking angry, I'd laugh now, thinking about the early stages of this, when the payments stopped coming through, and they clearly didn't want me to talk about any of this publicly. How on earth can you not tell your readers about it, when something this unjust happens to you and them?”

Speaking to Printweek, Cox added that he had been “cloth-eared” even when people had advised him to be cautious about the publisher, because he had believed in its mission to connect authors directly with their audience, and get unusual books published.

“It was this publisher that allowed you to write the weird stuff that a mainstream publisher would turn down because it wouldn’t sell,” he said.

“It was a way of proving them wrong.”

He added that there were many “passionate book lovers and some lovely people” at Unbound, but the business was let down by financial and structural issues, long before the non-payment issue arose.

“I feel there are people that are probably responsible for it that have walked away from the burning building, but they’re not getting mentioned.”