Yesterday afternoon Publishers Group West President Rich Freese sent out a statement to all PGW publishers outlining the distributor’s position in the wake of Advanced Marketing Services‘ Chapter 11 bankruptcy filing, and what it means for the future of its more than 150 publisher clients. The most important points of the statement:

• PGW filed a motion on January 5 filed with the court seeking approval to give PGW publishers “Critical Vendor” status and have asked the court to allow PGW to make payments totaling the amounts due from PGW to PGW publishers in January 2007. “We believe that Critical Vendor designation is a significant step for PGW publishers and expect this motion to come before the court during a hearing on January 24th,” says Freese.
• Contradicting statements in the media and the blogosphere, “PGW publishers are the owners of their inventory held by PGW in its warehouses in accordance with our contractual relationships.
• Finally, Freese wants “to reiterate that neither AMS nor PGW have ever pledged the PGW publishers’ inventory held in PGW’s warehouses against our credit line. Accordingly, the bank excludes the PGW publishers’ inventory from its calculations against the borrowing base.”

More updates are pending, as are weekly COD checks to each publisher post-petition.

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As the Advanced Marketing Services Chapter 11 Filing takes more twists and turns (many of them appear in a post below) it’s helpful to turn the clock back a few years and go through the accounting scandals, fraudulent claims, federal investigations, criminal charges, civil actions, guilty pleas and resignations that have dogged AMS for years – and are almost certainly the strongest mitigating factors leading to their bankruptcy filing. What emerges is a story of a company that preferred self-aggrandizement to truth, bold claims instead of realistic expectations and a ship that started sinking years ago until the wreckage became so decimated that the only real recourse, especially for suddenly-struggling independent publishers, is to splinter and start over.

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