More Words, Deeper Hole

AIUI, from a source I trust and who had good insight in what happened, the issue was that Jim Baen might have been a good editor, a great marketer, and with a keen sense of story, but he wasn't really a professional at running a business. When Baen Books suddenly got noticably higher sales and revenue due to its successful ebook strategy, he set aside the normal amount of money for royalties and taxes, and put the extra money into whatever pet projects he had. So when it was time to pay taxes and royalties, Baen Books had set aside much less than they needed.

Then Jim Baen handled the communication with some of the writers and their agents badly. My source was directly impacted by that, in that they got some royalties delayed and couldn't get as big an advance on their next book as was customary, but at least they got to talk directly with Jim Baen.