MAIN NEWS HEADLINES
March 22- March 29, 2007 Edition
B&T Sale Closes,
But A Few Loose
Ends Still Remain
3/22/07–Baker & Taylor received the U. S. Bankruptcy court’s stamp of approval on March 9 to buy most remaining assets of bankrupt American Marketing Services (AMS) including AMS’s distribution unit in the UK and Mexico. But various loose ends may continue to dangle for months. Not included in the B&T sale was about $40 million in old book club inventory, $50 million in accounts receivable from PGW, and $20 million in inventory from AMS’s publishing group, APG, which is still up for sale. In a new development March 16, the court approved the hiring of a UK law firm, Freshfields, Brucknaus, Deringer to represent the Official committee of Unsecured Creditors in matters involving AMS’s purchase of stock in two English subsidiaries of Advanced Marketing (Europe), Ltd., a wholly owned non-debtor subsidiary of AMS. The English law firm will seek to determine if the stock purchase is “likely to result in any material adverse implications to the Debtors’ estates, and the potential sales of other AMS subsidiaries in England.” Arguments on this issue are scheduled for a U.S. court hearing April 27, 2007 at 10 a.m.
Meanwhile, AMS on March 20 executed book return agreements with some publishers and will soon execute agreements with others. Court documents show that basically, publishers will accept from AMS the return of all “returnable inventory” published or sold by the publisher and delivered to AMS prior to the December 29, 2006 bankruptcy filing. Fortunately, publishers won’t have to accept damaged goods that don’t meet normal industry practices, and out of print titles. However, the agreement only governs books delivered to AMS prior to the bankruptcy filing. Apparently a separate agreement will be drawn to govern returns of books sold to AMS on or after the petition date. And sadly, publishers will have to bear the cost of freight for return freight or pay to have returnable inventory destroyed.
AMS is prohibited from returning more than 25% of the invoiced cost of goods delivered by the publisher to AMS between the December petition date and March 12, 2007. Returns that exceed that limit must instead follow procedures under a Master Return Program presently being developed by AMS and the Official Committee of Unsecured Creditors, which must be approved by the court. Publishers can, however, make special agreements with AMS on any excessive returns.
The effects of the bankruptcy have been widespread, affecting publishers not only in the U.S. but in the U.K. and Mexico. While most of the assets have now been sold, including the assignment of the PGW distribution unit to Perseus, not all of the dust has settled.