Publishers Weekly: “In what is likely one of the last sales of note in the AMS bankruptcy proceedings, the distributor and the Perseus Books Group have filed a motion with the bankruptcy court seeking its approval to sell the PGW name and office leases in Berkeley, Calif., and New York City to Perseus for $80,000. According to the motion, the sale involves ‘all intellectual property associated with the PGW and Publishers Group West marks and names, including but not limited to brand, logo and naming rights.’ The purchase also includes the signs above the front doors and reception desks at the New York and Berkeley locations. In addition, Perseus will pick up office equipment, furniture and data.”
If you want to continue to see independent presses thriving, do help out Soft Skull and McSweeney’s. Both presses have reduced the prices of their stock to offset the shortfall in promised revenue from AMS. (McSweeney’s reports that $130,000 of earnings is now gone.) Carrie has some recommendations.
The Counterpoint news was just the tip of the iceberg. Publishers Weekly’s Jim Milliot reports: “As part of its integration of the Avalon Publishing Group, the Perseus Books Group has formed six publishing divisions, an action that will result in the elimination of at least 12 positions and the phasing out of the Carroll & Graf and Thunder’s Mouth imprints. As many as 33 other employees could lose their jobs if they are not willing to relocate or take on new roles. In addition, Perseus will sell its Counterpoint Press imprint to Charlie Winton (see related story). William Strachan, editor-in-chief of Thunder’s Mouth and Carroll & Graf, and C&G senior editor Don Weise are among the editors being let go.”
This is terrible news. I disagree with Perseus Books Group President David Steinberger’s pronouncement that these two imprints didn’t have interesting identities. Carroll & Graf published ambitious literary novels, such as Paul Anderson’s Hunger’s Brides. And Thunder’s Mouth was a dependable press for quirky collections of B-sides from the likes of Jonathan Ames and Rudy Rucker. The closing of these two imprints suggests that idiosyncratic distinctiveness along these lines isn’t part of the Perseus future. Sure, it’s possible that these sorts of titles might be part of other imprints. And okay, the books from these imprints may not have sold. Publishing is, after all, an industry.
But the question, and perhaps the dependable Milliott might investigate this for us, is whether Perseus gave Carroll & Graf and Thunder’s Mouth the kind of resources they devoted to their stronger-selling imprints.
[UPDATE: More from Jeremy Lassen, who calls this “sad, scary news for genre publishing,” including a link to this letter to Avalon employees. Sarah observes that this is bad news for mysteries too. More at Galleycat.]
[UPDATE 2: Levi Asher: “No distinct identity? Absolute bullshit. Thunder’s Mouth covered the counter-culture with both new publications and essential reprints, and in this capacity they represent no insignificant part of my book collection. It’s sad that the corporate parent is dissolving this great company, and it’s offensive that they’re pretending it’s no big deal. Apparently Thunder’s Mouth had no distinct profits, but that doesn’t mean they had no distinct identity. For readers like me, Thunder’s Mouth is — was — a trusted and beloved brand.”]
I had planned to report on today’s bankruptcy hearing, even though I am now writing this post from an airport. But it appears that the fates (or, rather, the Judge) have decided to continue the hearing until later this week, making my job a little easier. Judge Christopher Santochi has informed publishers that they may sign with both NBN and Perseus, if they so desire. This puts NBN in the spot of getting the appropriate paperwork together before Wednesday afternoon. (And if NBN does not, then Perseus’s offer will be approved on Thursday morning.)
This puts the ball squarely in the courts of NBN and the respective publishers to do the mad scrambling. We shall find out soon enough whether PGW will operate the aegis of NBN or Perseus soon enough. Tomorrow, I will attempt to determine if there are any hesitations some publishers may have in going through NBN. And while NBN’s offer is certainly a sweeter pot than Perseus’s, I will attempt to determine any possible disadvantages.
Meanwhile, Publishers Lunch reports that AMS plans to sell “the majority of its assets, excluding PGW” to Baker & Taylor. The release can be found here.
We’re now less than a week away from the February 12 bankruptcy hearing. But this morning, PW reporter Jim Milliot revealed that one of the two mystery buyers was the National Book Network. NBN made a better offer to PGW clients than Perseus. NBN plans 85 cents on the dollar and only a three-year contract extension (as opposed to Perseus’s 70 cents and four years). Further, NBN has filed an unsecured claim to retrieve the remaining funds, instead of an administrative claim. This is a good sign that NBN might be spreading some of the monies around to the creditors. Galleycat has a memo of NBN’s offer for your perusal.
Radio Free PGW, in a shocking digression from its trademark cynicism, has signaled its approval of NBN, writing, “Hopefully, this will mark an end to the hard sell and arm twisting, and we hope to never hear the words ‘sixty-five percent’ again.”
Of course, since many PGW clients have signed agreements with Perseus (and from what I can determine, these agreements are by no means final; Perseus must have 65% of the PGW clients signed on before the February 12 hearing for the deal to go through), it will be interesting to see how this showdown between NBN and Perseus plays out. And what of the third rumored AMS purchaser? Will we see 90 cents on the dollar and two years? 110 cents on the dollar and six months? Come on, indie presses, hold out and watch these titans tear their follicles out while trying to woo you!
This morning, Jim Milliot reports that Perseus has received signed agreements from “more than 10” ex-PGW publishers. Presumably, this is the 70 cents on the dollar reimbursement in exchange for four years of distribution deal that was bandied about like a tainted carrot to the PGW publishers left in the lurch. This does not mean that Perseus has acquired PGW, but Perseus’s goal is to grab 65% of the PGW clients before the February 12 hearing date. Under the deal, the publishers will retain ownership of their inventory, if not their sunny dispositions.
A former Perseus employee has emailed me, observing the following: Perseus is more concerned with the distribution end of the business rather than the publishing end. This reader also suggests that Barnes & Noble, which sometimes excludes particular titles that aren’t distributed by Sterling, is a shadier example of vertical integration than a prospective PGW/Perseus merger. (As an anonymous publisher reported to Holt Uncensored back in 2003, Sterling began to cut orders from 500 or more down to 100 or less for publishers who weren’t “team players.”)
Because B&N has been able to maintain such a business practice along these lines without any apparent antitrust suits (at least none that I am aware of), this may set a Perseus-friendly precedent for any prospective Perseus-PGW merger. Indeed, I suspect it would be quite easy for a lawyer to craft a disingenuous argument suggesting that an antitrust situation would only exist if an entity controlled all three aspects of the book business: publishing, distributing and selling.
This reader goes on to suggest that Perseus has “found the loophole” by focusing its efforts on book distribution. After all, assuming that your accountants haven’t underreported revenue or hidden the cash a la Sorrento Mesa, book distribution makes money.
A large question mark now hovers over a definitive Perseus-PGW coupling. This morning, PW‘s Jim Milliot reports that there were two additional offers in addition to Perseus’s. AMS’s primary lender, Wells Fargo Foothill, however, has permitted “one more opportunity to consummate a going concern sale.” (And has one of the two offers, as Radio Free PGW suggests, come in from the Chas Levy Company?) AMS, meanwhile, has postponed its annual meeting (apparently, “annual” means little to AMS; they haven’t held an “annual” meeting in four years) to February 23, due to shareholder Robert Robotti’s resignation.
The Book Standard‘s Kimberly Maul reports that Robotti has been replaced by Marc E. Ravitz as AMS Director, coming in from Grace & White (who had a 10% stake in AMS in 2006).
McSweeney’s has issued a public statement, noting, “From here on out, the slate will be clean again and you can count on the standard percentage of your book-buying dollars to go to us publishers. What’s that you say? Would it help for you all to buy books now, during this lean time? Well, sure—it would. We and all the others in this situation do best with these direct transactions, and we promise to deliver top-notch books in return.”
Meanwhile, the publishers have until February 7 to file objections to buyout offers — this, as Perseus’s 70 cents on the dollar offer to indie publishers in exchange for four years of distribution lays on the table. It remains uncertain whether the other two buyout offers have instituted a similar form of
blackmail distribution bailout, but I’ll be tracking all developments as they come.
More info on the Perseus-PGW offer: “Perseus CEO David Steinberger said that the company’s standard offer will be 70%, and that the only exceptions will be if a publisher’s fourth-quarter sales seem disproportionate to the rest of the year. ‘We have to give ourselves some flexibility,’ he said. He expects that only in rare cases will the offer to a publisher be less than 70 cents. Steinberger said both Perseus and AMS will move forward with the bid for PGW only if publishers comprising 65% of pre-petition claims agree to move their contracts to Perseus.”
- At Galleycat, Sarah has enlisted the help of Scrivener’s Error author C.E. Petit to explain what the possible Perseus deal means. Petit compares the speculative merger quite rightly to the vertical integration once practiced by the movie studios. Back in 1945, the Justice Department cracked down on the Big Eight studios, who not only made the movies but also owned the theatres in which their films were distributed. This, of course, left independent producers in the lurch. Because Paramount and company had a vested interest in keeping their product circulating, it was clear that independent producers who weren’t operating under the Big Eight umbrella were placed on a second-tier. Since Perseus is also a huge publishing outfit, one wonders whether Perseus will do something similar, should a PGW buyout go down. After all, if Perseus is laying down a sizable chunk of change, the company is going to want to protect its investment. It’s quite possible that this means giving the minority of table placement to the indies, if any at all.
- The usually sharp Sara Nelson has a remarkably obtuse editorial about AMS. Nelson is mystified by why everyone is talking about AMS, concluding that the “economy of scale” “may help editors stop worrying about how to get books out, and go back to what they do best: focusing on how to get them in.” Soft Skull publisher Richard Nash responds , observing that Perseus “up until three years ago, knew little about distribution” and observing that “[t]he Perseus catalog is going to be the size of a telephone directory–that is not going to help retailers and it is not going to help publishers.”
- In today’s PW, Jim Milliot reports that Simon & Schuster lost a bid on $5 million in inventory. He also offers a second story, with sparse reactions on the potential Perseus buyout. In the latter article, Black Classics Press head Paul Coates says that the 70 cents on the dollar offer would only work with current PGW staff in place.
- What does Radio Free PGW think of all this? Holograms of PGW employees are the only option.
- The story has finally hit the AP, with Grove/Atlantic publisher Morgan Entrekin opining that the Perseus deal could give indies more leverage, and The Wall Street Journal (the story is behind a paywall).
Publishers Weekly: “The Perseus Books Group made it official this morning, announcing that it had made an offer to acquire “substantially” all of the distribution contracts of PGW, the distribution unit of bankrupt AMS. As previously reported here, Perseus is offering to pay all PGW clients 70% of the money owed to them by PGW, but not paid because of the Chapter 11 filing, in exchange for taking over distribution. In addition, Perseus will pay PGW’s operating costs for a five-month transition period following closing of the agreement. The deal is subject to approval by the bankruptcy court, and AMS will file a motion later this week to get that approval.”
Ron Hogan reports one hilarious development of the Penguin lawsuit against Zak Smith’s Picture Showing What Happened on Each Page of Thomas Pynchon’s Novel Gravity’s Rainbow. The publisher, Tin House, is distributed by PGW. When the lawsuit happened, they had to push back the book’s release date, which meant that had the book shipped in December, Tin House would have lost around $100,000 in revenue. Plus, the publicity generated by Penguin’s lawsuit spurned interest. If only Penguin had found a way to sue all 150 publishers at the end of 2006, they might have saved a few more indie publishers.
- The big stories from Publishers Weekly today, closely related to the AMS bankruptcy, is Perseus’s surprise purchase of Avalon. Avalon was PGW’s largest client and is headed by Charlie Winton, who was one of PGW’s co-founders. Perseus CEO David Steinberger claims that he’s developing a plan with Winton to assume distribution for the remainder of PGW clients. Well, “developing a plan” is all fine and dandy. But with PGW’s largest client moving to an entirely new distributor, this doesn’t bode well for the now limping PGW or the indie publishers left in the lurch. In fact, the cynical folks at Radio Free PGW have already penned a PGW obituary.
- Matthew Tiffany has the scoop on Twin Peaks, Season 2: April 10, 2007, six discs, twenty-two episodes. This will be of great comfort as I spend most of my spare time sobbing as I do my taxes at the last minute. In fact, what this DVD release needs is a marketing tie-in for April 15. What better way to put tax time in perspective than dancing midgets, deaf FBI bureau chiefs, and one-armed men?
- Brian Boyd on bioculture vs. literary theory.
- Richard Horne has been found dead of an apparent suicide. (via Brockman)
- Sobol may be dead, but these schmucks have started a new literary contest. First Chapters? It may as well have been called the Gorgon.
- A William S. Burroughs doc. (via Jeff)
- As Galleycat reported this morning, reporter Peg Brickley has noted the following: On Monday, AMS is now seeking the Delaware Bankruptcy Court’s permission to sell itself or refinance its senior debt. The senior debt, of course, is the $220 million that is owed to publishers. Should the Court provide AMS permission, this would permit them to raise additional monies to pay off the existing debt, converting the debt into equity. But it remains to be seen whether AMS’s proposed plan would involve a swift revenue return to the indie publishers now left in the lurch or one that could go on indefinitely, as AMS attempts to raise its cash through a sale. It is also unknown whether AMS would seek protection from its creditors under the current bankruptcy plan. Either way, this setback isn’t good news for the Q4 2006 revenues now owed to publishers. As previously reported, a creditor’s committee meeting is scheduled for this Friday. So hopefully we’ll have some more information by the end of the week on whether there are any developments on the senior debt.
- There’s been some discussion by PW readers on this issue. Tom Haworth writes, “”One would think that Publishers would keep better track of the financial condition of a company that had not produced a legitimate quarterly or annual report for the past 3 years. The financial arm of all piublishers [sic] need to be more up to speed with the deals the sales and marketing arms are making. It’s easy to say that AMS’ customer are so big and strong that we must continue to pursue this business. But, one must remind the publishers that these companies (Costco, Sam’s and BJ’s) assume very little if any risk in dealing with AMS.”
- “Best coverage” or not, there’s been nothing else from the conspicuously silent PW on the purported “sources” who claimed that AMS was looking to unload PGW on a seller. So I’m going to have dismiss PW‘s report as rumormongering until they can come up with something concrete.
- The bankruptcy attorneys stand to make a killing.
- Mr. Popman announces, “I TOLD YOU SO!” and offers a few thoughts on why he saw the AMS bankruptcy coming.
- Levi Asher offers a personal comparison to the AMS bankruptcy.
- This Ain’t Livin’ believes that this spells out the end of an era.
- For those interested in the early PGW culture, Pat Holt offered a remembrance in January 2002. Of PGW co-founder Charlie Winton (now head of Avalon), who was replaced as President and CEO in favor of Rich Freese in July 2003, Holt writes, “And Winton did more: He delivered regular payment to cash-poor independent publishers who were accustomed to being the last vendor to be paid; he made it easy for independent booksellers to buy from a wide array of books without drowning in paperwork; he got orders for books from chain bookstores that would never have considered listening to a sales pitch from the smaller presses; and he established an in-house department to help independents with deadlines, editing and book design.” My, how times change! It’s worth noting that Holt expressed great reservations about the AMS sale, noting that AMS was “the opposite of PGW.”
- More on Winton from 2002: “As for the acquisition’s effect on publishers and the culture, it’s been a while since the sky-is-falling crowd really had anything to stew about–you might have to go as far back as B&N-Ingram–so if nothing else, Winton gave them some fodder. The argument: that Winton’s damn-the-torpedoes attitude–he was known for carrying publishers and books he liked even when their numbers were questionable–won’t fly with corporate bosses that just paid $37.3 million in an tight market.”
- And for those who wish to examine AMS’s SEC filings, you can find them here. Today’s filing? An issuance of common stock at $0.001 per share, filed by Foundation Resource Management, Inc. Is this the equity AMS hopes to raise to pay off its senior debt? Is this a sign that the Delaware Bankruptcy Court approved Monday’s request?
- Another roundup from Galleycat, including this statement (PDF) issued yesterday by PGW President Rich Freese. Freese asserts that the publishers are the owners of the inventory in the Indianapolis warehouse and that he’s cutting COD checks for post-petition payments. (I don’t believe the first assertion was ever in question. Then again, it’s Freese’s ass against the wall.) Well, that’s great, Rich, but what about pre-petition payments? You know, those monies PGW owes the publishers from October, November, and December? Well, that’s where a motion filed on January 5th comes in. The motion hopes to give PGW publishes “Critical Vendor status” and pay out these amounts sometime this month. Even if this motion passes, however, this still doesn’t ensure that the monies paid out won’t be “pennies on the dollar” payments. Again, as I pointed out in my initial post, PGW is going to need a lot more than $75 million to handle that.
- Meanwhile, Publishers Weekly has opened its doors to speculation on what can be done to change the current publishing industry model.
- There’s still nothing concrete on yesterday’s PW rumor that AMS was planning to sell out PGW. If you have any leads, drop me an email.
- Rachel Kramer Bussel reprints an email from Best Lesbian Erotica editor Tristan Taormino. In an effort to make up lost revenue, Cleis Press is offering a winter sale.
- More on the Quarto setback, which appears not to be as severe as previously reported, from This is Money. Broker Collins Stewart has remarked that AMS was only 3% of Quarto’s total sales.
- Meanwhile, former PGW employee Erica Mulkey writes: “I don’t know how I feel about this. It seemed inevitable, but what sucks is that yeah, PGW management has been weak and ineffective for a long time, at least since Mark Ouimet left, possibly since Charlie left, but PGW was essentially a Good Company. AMS (who bought PGW in 2001, or was it early 2002?) has been unprofessional and poorly managed to an unbelievable degree this whole time, and everyone knew it. Anytime AMS tried to interfere with PGW it was debacle after clusterfuck after shitstorm.”
- There’s continuing coverage at Galleycat, with additional commentary from Sarah, as well as the effects of AMS’s bankruptcy on Quarto, a publisher that has suffered significant losses (to the tune of $1.5m in payments). More on Quarto here.
- Additionally, Sarah has unearthed some considerable corruption within AMS over the years. I’m hoping to investigate this in more depth soon, but it appears that numerous AMS executives have been subject to SEC criminal charges since AMS purchased PGW.
- ICV2 has more, reporting that AMS has had considerable legal expenses over the years: over $14 million in 2005 and $6 million in 2006 (although offering no sources for these figures).
- Icarus Comics suggests that the AMS bankruptcy should serve as “a warning” and that Diamond, despite all the criticisms leveled its way, is an efficient and profitable distributor.
- Charlie Anders suggests supporting publishers through alternatives (such as the magazines at McSweeney’s and Soft Skull’s fiction subscription).
- The San Diego Business Journal tracks down AMS’ largest shareholder. The man’s name is Robert Robotti. His stock dropped from $3.4 million to $650,000 after the bankruptcy. That’s 7% of the outstanding stock. Robotti says that the bankruptcy move was the right decision. He would not reveal the steps in progress to preserve AMS, but it does involve selling the company.
- Kathryn Cramer offers some analysis on why publishers were continuing to use AMS as a distributor when AMS had several executives cooking the books. It may be because of AMS’s near-exclusive access to the discount retailers. Cramer’s question is whether or not AMS held a monopoly in violation of the Sherman Antitrust Act.
- But the biggest potential news comes from Publishers Weekly: AMS may be selling off PGW. PW says it has sources which suggest that there have been discussions along these lines, but until there’s more reliable information here (like PW offering a named source), this is mere conjecture.
Here are the most recent developments:
- Some folks have a sense of humor about PGW.
- Violet Blue has offered her thoughts on the meltdown, noting how the impact affects Cleis Press and pointing to a former AMS exec’s prison sentence. (The charge: falsifying earnings.)
- Soft Skull’s Richard Nash puts the catastrophe in perspective.
- Dan Wickett shares some ideas on how publishers might want to pick up some cash to make up for the lost revenue. The inspiration? An idea first put out there by Richard Nash.
- Scrivener’s Error has a helpful legal breakdown. The news ain’t good.
- Paul Collins: “Innumerable small publishers working with AMS and their subsidiary PGW — just about every good small publisher you’ve ever heard of — woke up in the street on New Year’s morning with their clothes missing and a pair of black eyes.”
- No further news as of yet from the San Diego Union-Tribune, but I don’t think we’re going to see any major action until the creditors committee meeting on January 12.
- I’m experiencing some technological issues with my main computer (hence, scant email replies from me for a while; apologies). But I’ll have more for you on Monday.
- [Sunday morning item]: Nick Mamatas reveals some inside information. Soft Skull (and perhaps others) has held off on inventory until forming a short-term strategy. There was apparently a lengthy conference call with 55 publishers and 6 lawyers conducted on Friday. (I have confirmed with an independent source that there was indeed a conference call, with over 70 publishers represented.) The consensus was that these publishers decided to ship the books to the PGW Indianapolis warehouse, despite the risks, and hope that revenue would come right in. So we know that stock for some of the 150 publishers will continue to be offered for the time being. Let’s just hope that PGW will come through on the revenue front.
- [Additional Sunday item]: Critical Mass observes that Pages Magazine was operated by AMS.
The Gray Lady finally gets on the case, with reporter Julie Bosman speaking to an unnamed publishing executive. “The publishers are going to end up taking a huge loss,” says this executive. Also quoted in the article is Grove/Atlantic publisher Morgan Entrekin, who simply says, “It’s a mess” and who is reported as now being in something of a mad scramble. Entrekin has nothing more to say beyond these three words.
Okay, so the publishers aren’t talking (or at least going on the record with journalists). But I must quibble with this publishing executive’s asinine suggestion that “authors and readers were unlikely to be affected by the bankruptcy filing.” With AMS currently incapable of paying off their creditors, with a pennies-on-the-dollar turnaround at best, and with current AMS stock now being extricated from warehouses, it’s very likely you won’t be seeing independent books in stores anytime soon, until the publishers left in the lurch work out alternative distribution methods or guaranteed ways to earn current revenue. So readers looking for something different from, say, Laurell K. Hamilton and Mitch Albom are going to start seeing a difference.
And let’s consider the publishers, who are now in the process of bearing the financial brunt in ways that may very well go unreported. With reduced revenue coming in, it is unlikely that the affected publishers are going to be paying out advances to authors as they struggle to meet their operating expenses. Authors who are writing quirky or experimental books that don’t sell as well as the blockbusters often must go to independent presses to get their work published. But if the independent presses are hurting, then advances and acquiring new titles may be the least of the indie publishers’ cost concerns as this mess gets sorted out.
This morning, Publishers Weekly reported grimmer news, noting that the bankruptcy court is now in the process of granting the publishers access to the inventory. At the moment, access is now at the discretion of Judge Sontchi. A creditors committee meeting is now set for January 12, but with the creditors committee being comprised of the 20 largest creditors (i.e., the big publishers), it remains to be seen whether the precarious financial condition of indie presses will be taken into account by the committee.
Heidi MacDonald observes this morning that it remains unknown what distribution percentage Dark Horse had with PGW.
- The official press release from AMS.
- The Seattlest’s Jeremy Barker focuses on the effect on Seattle presses.
- Matt Wagner suggests that consolidation may not be good for small presses, even if PGW’s huge volume allowed for independent presses to get into big-box stores.
- Sarah points to the Canadian impact.
- At The Beat, comics publisher Actionopolis/Komikwerks offers a response. Shannon Eric Denton and Patrick Coyle relay their attorney’s thoughts: AMS is looking for a buyer, but that a “fresh start” will enable any new company not to take on the debt. So they may be more attractive now than they were before the bankruptcy filing.
- Dean Haspiel: “BOTTOM LINE: in order to succeed, the author has to become the publisher and the publicist and, sometimes, the printer, too.”
- Time Out New York is looking into the story.
- At the Engine, Heidi MacDonald asks people how the AMS bankruptcy will affect them. Among some of the highlights: Warren Ellis insists that HarperCollins will not get the advance back for his second novel and Comic Relief owner Rory Root pointed out, as Soft Skull’s Richard Nash suggested in the first AMS post here, that pennies on the dollar is the likeliest prospect for the creditors.
- Colleen Doran suggests that Dark Horse was expecting big money from Frank Miller’s 300. [UPDATE: In the interests of accuracy, it remains uncertain what degree of output Dark Horse had with AMS, but hopefully we’ll have more information on this soon.]
- Unrelated to all of this, but perhaps indicative of the current publishing climate is the Independent Press Association ceasing operations. (Thanks, Dan Wickett, for the link.)
Just before everybody popped open their bottles of champagne, Advanced Marketing Services filed for Chapter 11. Publishers Group West is owned by AMS. (PGW, which had operated independently for thirty years, was purchased by AMS in 2002.) And PGW is the exclusive book distributor for many of the independent presses you enjoy: Avalon, McSweeney’s, Soft Skull, North Atlantic, Shoemaker & Hoard, the list goes on.
All of these publishers are owed money by PGW for revenue collected during the last three months. And they haven’t received it. Nor are they guaranteed all of it. In other words, the monies that were collected during the last quarter of 2006, which includes the Christmas season, are now locked as AMS undergoes bankruptcy filing procedure. I don’t know how well Dave Eggers’ What is the What sold (perhaps someone with a Bookscan account might offer a sum), but given that this was positioned as the big McSweeney’s title, the loss must be staggering. To say that this will leave “pain in its wake,” as Michael Cader suggested yesterday, is something of an understatement.
In a story filed this morning, Publishers Weekly reported that Costco will operate “on a business as usual basis” and that publishers would soon have access to the inventory now being held in AMS’s Indiana warehouse, once they have received approval from the court. AMS has also had $75 million in debtor-in-possession financing approved, but it’s unknown when these funds will move. The San Diego Union-Tribune reports that AMS needs about $14 million to purchase new books to be delivered. But, again, these monies are to ensure that AMS remains in operation as they undergo bankruptcy restructuring and these are not necessarily monies that will find their way to all the publishers left in the lurch.
Publishers are remaining understandably silent about this major setback. After all, no man wants to confess the amount he has in his checking account. But given that many indie publishers operate from paycheck to paycheck, this may signal significant loss and possibly a death knell for more than a few of them.
Here’s a list of the top twenty-five creditors:
1. Random House ($43.3 million)
2. Simon & Schuster ($26.5 million)
3. Penguin Putnam ($24.6 million)
4. Hachette ($22.6 million)
5. HarperCollins ($18.0 million)
6. Publications International ($12.5 million)
7. VHPS ($9.6 million)
8. Andrews McNeel Publishing ($8.7 million)
9. John Wiley & Sons ($6.0 million)
10. Leisure Arts ($4.7 million)
11. Workman Publishing Company ($4.4 million)
12. Rich Publishing ($4.4 million)
13. Chronicle Books ($4.3 million)
14. Meredith Corporation ($4.3 million)
15. Houghton Mifflin Trade ($2.6 million)
16. Avalon Publishing Group ($2.3 million)
17. United States Playing Card Co. ($2.0 million)
18. Zondervan ($2.0 million)
19. Global Book Publishing ($1.7 million)
20. Cook Illustrated ($1.5 million)
21. Client Distribution Service ($1.4 million)
22. National Book Network ($1.1 million)
23. New World Library ($1.1 million)
24. Grove/Atlantic ($1.1 million)
25. Hugh L. Levin Associates ($1.0 million)
And that’s just the first twenty-five unsecured claims. That’s a total of $210.7 million dollars owed to these creditors. Clearly, $75 million isn’t going to be enough.
The big question here is how the creditors will be prioritized. If there is only a fraction of monies available for the creditors, will it be awarded to those with the largest bills (i.e., the big publishers) or will the Bankruptcy Court Judge understand the precarious position that independent publishers are in?
Judge Christopher Sontchi is presiding over the bankruptcy in Wilmington, Delaware. Judge Sontchi appears committed to moving things along. In the Home Products bankruptcy, Judge Sontchi permitted pre-bankruptcy claims of creditors to be paid in full before confirmation of a plan. Whether this will translate into a quick remedy for AMS’s tremendous debt remains to be seen.
It’s unknown what this will mean for PGW employees. Will PGW be purchased by another entity or will it struggle along under AMS’s ownership? For the moment, it appears that AMS will continue operations on a day-to-day basis.
I will keep tabs on this story as I learn more info.