We’ve been following the story of the Chapter 11 filing of AMS/PGW closely here, but its announcement on a holiday Friday means everyone was caught flat flooted. Distributor bankruptcies can be devastating, but in this case Random House seems to be in the hot seat, with some $43 million in monies owed.
In the comics world, PGW distriuted Dark Horse’s prose book line M Press/DH Press, as well as Gigantis Graphic Novels, Broccoli and Actionopolis/Komikwerks. We’ve contacted all for comment, but so far only the latter has responded with the following statement:
To all of our loyal customers and friends:
By now, you have probably heard that American Marketing Services (AMS), the corporate parent of Publishers’ Group West (PGW) has filed a Chapter 11 bankruptcy petition in the state of Delaware. PGW is our distributor. We have had discussions with PGW and we have received assurances that our books are safe and that all deliveries will continue to be made.
We have consulted a bankruptcy lawyer who has only analyzed the articles and press releases. The lawyer believes that AMS was probably wise to file for bankruptcy protection – and probably did so upon the advice and consent of its bank and investment bankers. According to the lawyer, AMS is seeking someone to acquire the company, and has probably entered into confidentiality agreements with potential suitors. AMS entered into a loan agreement with Wells Fargo Foothill, Inc. for $75 million in Debtor-in-Possession financing; so the company should be able to continue all operations during the bankruptcy proceeding.
In its own statement, AMS said it has been working on “alternatives to strengthen the Company’s financial base and resolve past legal and regulatory issues.” According to the articles read by our lawyer, AMS was required to restate its SEC financial reports and disclosure statements and has been mired in derivative stock class action litigation since approximately 2003. The company had recently entered into numerous settlements with some of the litigants. However, these events have been oppressive and time consuming for AMS management – and they have taken management away from its general business operations. When AMS emerges from bankruptcy, every cause of action, every judgment, every claim of any kind that existed before AMS filed its petition, should be left in the bankruptcy court. The buyer will purchase a CLEAN company, with restated asset values that will satisfy the Securities Exchange Commission, and the company will be able to pay attention to its ongoing business and go back into the stock market. So, AMS is probably worth much more to a potential buyer by going through bankruptcy proceedings.
We believe that AMS acted in its best interest and, if a proper suitor is located to purchase AMS, the company will emerge a much stronger company that will be better able to serve its customers, including Actionopolis.
Shannon Eric Denton and Patrick Coyle