Winton said to PW Daily that the idea to acquire Counterpoint was part of the original negotiations to sell Avalon (Winton’s former company) to Perseus, but that the bankruptcy of Publishers Group West “put it on the back burner while we straightened out the world.” Perseus wound up acquiring PGW during the PGW bankruptcy proceedings and represents 120 PGW clients. As for Counterpoint, Winton is shopping for office space in Berkeley for the 10-person Counterpoint staff, though it remains to be seen if any or all will, in fact, move to California. Also worth noting is that the other half of Shoemaker & Hoard, Trish Hoard, only recently moved to Manhattan after many years in Washington – no word yet on whether she will stay put, but emails and phone calls are pending…

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Meanwhile, as more former PGW clients sign on with different distributors (including National Book Network, which was in the running to buy PGW outright) one non-consenting publisher was victorious in court at the end of March. Goofy Foot Press, a single-title publisher run by Paul Joannides, was awarded all of the post-petition sales that it requested–a payment that other PGW publishers received. PW Daily further reported that Judge Christopher Sontchi issued a stern rebuke to AMS’s attorneys, calling their treatment of Goofy Foot and other small presses, from whom he had received numerous letters, “outrageous” and threatened to withdraw the executive compensation order for bonuses. According to the hearing transcript released this week, the judge said their actions were “inconsistent with the representations that were made to the Court for the basis to approve the PGW sale to begin with,” and added that if the sale hadn’t already gone through, he would have stopped it. Harsh words, if a bit on the 20-20 hindsight front.

As for Goofy Foot, PW Daily adds that the press is close to signing on with NBN, which illustrates a point made here in the midst of the AMS fray: even losing the bid for PGW made NBN a winner because they could cherry pick among the non-consenting publishers and take on a smaller, more cost-effective load and thus remain able to break even or at least turn a profit. Perseus, of course, got to acquire the publishers it truly wanted (like Avalon and Grove/Atlantic) and integrate dozens more for its own devices. There’s much dust to settle, especially with a court hearing still slated for April 20 for releasing books still held by PGW.

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But National Book Network isn’t counting themselves out yet. CEO Jed Lyons announced the company is raising the payout to publishers to 100% of monies owed and dropping NBN’s $1.2 million claim against AMS, as well as another unsecured claim. NBN has agreements with 118 publishers, representing 42% of PGW clients, excluding Avalon, which is being acquired by Perseus.

And the 11:30 hearing will also address distributor Baker & Taylor ‘s plans to take control of the non-PGW-related bankruptcy holdings of AMS. Michael Cader noted in Publishers Lunch yesterday that “doing some reverse math” revealed some interesting findings. “In their January 24 court filing, [AMS] declared accounts receivable of $147.5 million and inventory of $72.5 million. But in the B&T letter of intent, accounts receivable have plunged to $65 million — implying that accounts have paid down their payables by returning up to $82 million worth of books.” That’s a whole lot of money unaccounted for, and it’s not even taking into account how much money Wells Fargo has first claim on. Radio Free PGW has much more on B&T’s offer and why, in his opinion, it’s the “recipe to make stinkbug pie.”

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Some of the PGW staff members took exception to the use of their names in the NBN letter, concerned that it represented an endorsement of the NBN offer, according to Avalon president and PGW founder Charlie Winton, but Lyons said the letter was meant to show NBN’s commitment to PGW, and not as an endorsement.

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Preferred is one thing, but at what price? And is being the only distribution game in town for hundreds of independent publishers a good way to do business, or will the anti-trust dogs have to be called in? Then again, let’s also remember that any deal, no matter how enticing it may seem on the surface, still has to be approved by the Delaware bankruptcy court overseeing the AMS case. And if Christopher Sontchi decides not to give his okay, then it’s back to square one for a great many publishers. Point being, no matter what happens, the news will never be entirely good – it’s really a choice between the lesser of several unsatisfactory options.

But until the deal is approved – or not – we’re left with a lot of tentative possibilities. Avalon is definitely going to Perseus, and Grove/Atlantic is pretty well on its way, too. PW Daily reported yesterday that if the court approves the proposal, PGW will continue to provide distribution services for publishers before ultimately transferring their books and operations to Perseus’s distribution facility in Jackson, Tenn. It is unclear what the long-term role for PGW staff will be in the Perseus operation. And sources also told both PW Daily and Shelf Awareness that Levy Home Entertainment, whose main business is supplying mass market outlets with books, is still working on a bid to acquire AMS’s warehouse club business. That’s because they have opened an office in San Diego and hired on several former AMS staffers, though neither AMS nor Levy confirmed the reports directly to either publication.

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With regards to returns, Freese states that “any returns physically received at our Indianapolis distribution center pre-petition (prior to our Chapter 11 filing on December 29th) have been applied to pre-petition payables to PGW publishers. Up to this point, we have not been deducting post-petition returns (after our December 29th filing) from post-petition payments to publishers. We are currently working on establishing procedures to handle charging back post-petition returns against PGW publishers’ post-petition sales.”

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Meanwhile, PW has more on Avalon‘s sale to Perseus, confirming that the deal was a long time in coming. “Moving distributors is at least a three-year commitment and I’m not sure I wanted to stay through 2010,” said Avalon president Charlie Winton. As discussions with Perseus progressed, Winton became convinced that the company, with its decentralized structure and satellite offices, would be a good fit for Avalon. Radio Free PGW’s perspective is that the selloff won’t make that much of a financial difference to the fortunes of Publishers Group West, but “the death knell for PGW would be if Grove/Atlantic, Berrett-Koehler and perhaps New World cut and run.”

And what of those other PGW clients whose distribution fate hasn’t been decided? PW Daily reports that PMA, the Independent Book Publishers Association, has put together a plan it hopes will help out with some of the “extremely challenging issues” for PGW clients. According to PMA director Terry Nathan, the association plans to act in three areas: establish a network of printers that will do short runs of books, to get inventory back in the control of the affected publishers; contact financial institutions to provide short-term business interruption loans; and look for other distributors to step in and help with interim distribution and/or cash flow.

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That’s because many of them – over 150, in fact – use Publishers Group West as their distributor. PGW, over 30 years old now, had been an independent distribution entity until AMS bought them in 2002. And even though PGW had been considered an autonomous unit within AMS, that only goes so far, especially when money owing is concerned. Because even though the volumes at play do not compare to what’s owed to the top corporate publishing companies, it’s all about the percentage of revenues – so companies like Avalon ($2.3 million), Cooks Illustrated ($1.5 million), Good Books ($970,000), McSweeney’s, North Atlantic Books, Milkweed and Soft Skull, to name a select few of PGW’s clients, are about to take a severe hit, what with expected revenues for the last three months – key months for all publishers, small or otherwise – suddenly disappearing.

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But one concern within Canadian publishing is that the bankruptcy will prompt AMS to sell its share in Raincoast. “As with any bankruptcy, companies look at a range of alternatives to strengthen their financial base, and that’s what AMS will be doing, and a sale of assets will be one of them,” AMS spokesman Rich Tauberman said. “It’s still early days, I don’t think anything has been firmly decided on, but they have been working with an investment bank looking at a bunch of different opportunities.”

Which is why Fidler spent the weekend talking with PGC’s biggest American clients, such as Grove, Avalon, and New World Library, as the effect on PGW clients may have a domino effect on PGC. But Fidler remains optimistic. “People I’ve spoken to …have shown great loyalty to PGW and would really like to see PGW come out of this.”

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