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here's the story in Publishers Weekly

AMS is our parent company

 

AMS Files for Bankruptcy

By: Jim Milliot

 

 

Advanced Marketing Services announced this morning that it has filed for Chapter

11 Bankruptcy in the U.S. Bankruptcy Court for the District of Delaware. The

company said it took the action after its bank, Wells Fargo, refused to extend

its loan agreement beyond December 28, depriving the company of operating funds.

Up until this point, Wells Fargo has routinely extended the credit agreement

though AMS has been in violation of certain lending covenants, which include the

distributor’s inability to file updated financial information for fiscal year

2004 and beyond.

 

In its release, AMS said that it has explored a number of alternatives to

strengthen its financial base and resolve past legal and regulatory issues

during the last several months, but that no agreements had been reached. AMS CEO

Gary Rautenstrauch told PW Daily it was not clear why the bank had now decided

not to issue another loan extension. Rautenstrauch added that he wasn’t sure

when the udpated filings would be made; earlier this year he thought filings for

fiscal 2004 would be completed soon. He said there has been “no recent

activity†in the long-running FBI investigation into AMS’s advertising

accounting practices.

 

 

 

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In its bankruptcy petition, AMS reported liabilities of over $100 million and

assets of more than $100 million. Its top unsecured creditor is Random House,

which is owed $43.3 million. Simon & Schuster, Penguin and Hachette Book Group

are all owed more than $20 million each, while HarperCollins is owed $18

million. The bankruptcy filing includes PGW; among the clients owed money are

Rich Publishing ($4.4 million), Avalon Publishing ($2.3 million), New World

Library ($1.1 million) and Grove/Atlantic ($1.1 million). Although the

bankruptcy filing says money will be available to pay unsecured creditors,

Rautenstrauch said at this point he wasn’t sure how much unsecured creditors

will be paid. It is also not clear when any payments will be made.

 

To keep the company operating, AMS has secured $75 million in

debtor-in-possession financing from Wells Fargo Foothill. The loan agreement

should be enough to meet AMS’s operating needs until the Chapter 11

restructuring is completed. Rautenstrauch said he expects AMS to continue to

conduct business “in the normal course.†Rautenstrauch added that AMS will

continue to pursue strategic alternatives for the company.

 

 

 

What gets us into trouble is not what we don't know, it's what we know for sure

that just ain't so.

- Mark Twain