PW Daily’s Jim Milliot reported yesterday that AMS and Baker & Taylor have reached a preliminary agreement to settle charges made by AMS that B&T wrongfully withheld $6.2 million when it made its final payment for the AMS assets it acquired. According to court documents, once the settlement receives the approval of the bankruptcy court judge, B&T will pay AMS $1.8 million. That figure consists of a payment of $6.05 million by B&T, minus $4.25 million AMS agreed to pay B&T under the transition services agreement between the two companies.
Posts Tagged ‘Baker & Taylor’
Distributor Baker & Taylor is waging battles on all fronts. First PW Daily reported yesterday that the ongoing fallout from the AMS bankruptcy took another turn as B&T – ordered by Advanced Marketing Services to pay up over $6.2 million allegedly withheld – filed a cross-motion of its own in U.S. Bankruptcy Court in Delaware, which is overseeing AMS’s bankruptcy, claiming that AMS sought relief in the wrong place. According to B&T, the APA “plainly and specifically provides that disputes concerning the calculation and determination of the Purchase Price are to be referred to an accountant.” Further, B&T alleges that it is owed $1.75 million by AMS for services rendered and expenses through the end of June, a figure which it says will rise to $2.5 million by mid-September. “Financial record keeping and reporting is well known by all not to be AMS’s forte,” the 25-page cross-motion goes on to state, which is about as bold an understatement as you’ll find.
Later, Judith Rosen reported that PMA, the Independent Book Publishers Association, has notified members that it is stepping in to help resolve grumblings about slow payments from Baker & Taylor . “A lot of responses I’m getting,” said PMA director Terry Nathan, “say that B&T has not been very responsive in the past. I’m giving it two weeks before I step it up a little bit. This will at least put B&T on alert, and they’ll starting treating independent publishers the way they treat large accounts.”
Thought there still wouldn’t be news about AMS, its bankruptcy, and resulting fallout? Think again. PW Daily’s Jim Milliot reported yesterday that Advanced Marketing Services filed a motion last week asking the judge who’s overseeing the company’s bankruptcy to force Baker & Taylor to pay AMS $6.2 million that AMS alleges B&T wrongly withheld when it made its final payment to acquire the majority of the bankrupt distributor’s assets. According to the motion, when the final installment came due in May, B&T paid $4.1 million rather than the $10.3 million that AMS had been expecting.
The decision to not pay the full amount, AMS said, is based on B&T’s “unfounded and patently erroneous interpretations” of the Asset Purchase Agreement. B&T alerted AMS that it was withholding the $6.2 million in an April letter from B&T CEO Richard Willis, and AMS said that its attempts to resolve the dispute since then have proved fruitless, prompting it to file the motion. AMS believes Judge Christopher Sontchi has it within his authority to decide the issue without any need for further discovery or an evidentiary hearing. The motion is set to be heard August 15 and objections can be filed by August 8.
The San Diego Union-Tribune reported at the end of last week that Advanced Marketing Services is asking the Delaware bankruptcy court to have until August 10 to file for Chapter 11, an extension from the current April 28 deadline. Bankruptcy law gives companies a limited amount of time to propose a Chapter 11 plan to pay creditors without competition from rival plans. As has been widely reported, AMS sold Publishers Group West to Perseus and its wholesaling operations to Baker & Taylor .
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.
That’s what PW Daily’s Jim Milliot is reporting in the wake of Baker & Taylor ‘s takeover of AMS assets. With the deal done, AMS CEO Gary Rautenstrauch was eligible to receive 70% of a bonus tied to the closing of the purchase, but it also meant that Rautenstrauch was out of a job since AMS intended to terminate Rautenstrauch when the deal was completed. No one at AMS was available to comment to Milliot on whether Rautenstrauch has indeed left.
The full announcement of B&T’s approved acquisition is also available, with more details on where business will take place. Baker & Taylor Marketing Services (the new name for the consolidated AMS) will continue to keep its primary office in San Diego and operate warehouses in Indianapolis, Indiana and Sacramento, California.
Remember when AMS news dominated GalleyCat‘s pages? It wasn’t all that long ago, but once the court decisions were handed down and PGW went with Perseus, things got a little more quiet. Except, of course, they didn’t, it’s just that the media got disinterested even though a handful of publishers who elected not to go with Perseus or any other distributor for the moment are getting undue unpleasantness by way of AMS’s attorneys. One non-consenting publisher, Paul Joannides of Goofy Foot Press, has gone so far to file a motion in bankruptcy court to have its contract rejected. “They are refusing to let us have our stock, and now they are withholding our money on recent sales that just a week ago they assured us they would pay,” Joannides said in an email to us.
But as that story plays out, so does the fate of AMS, now officially in the hands of Baker & Taylor after court approval of the $76 million dollar sale. PW Daily reported yesterday that Baker & Taylor has created Baker & Taylor Marketing Services and, beginning Monday, resumed shipping new titles to the warehouse clubs. The purchase, which also includes UK and Mexico assets, involves a range of assets used by AMS to sell bestsellers and other books into the membership warehouse clubs. The San Diego Union-Tribune had more on this story last week, including the news that post-bankruptcy, AMS lost more than $1 million per week in January and an even higher sum in February. Bruce Buechler, an attorney for the creditors, said the losses could total up to $2 million a week. “It’s a sad day,” said Bud Leedom, publisher of San Diego’s California Stock Report, who noted that AMS was one of the region’s oldest companies trading on Wall Street. “When they were founded in the 1980s, San Diego wasn’t a place that was known for publicly traded companies,” Leedom said.
After Radio Free PGW teased with a report of Monday’s court proceedings in the bankruptcy court presided by Judge Christopher Sontchi, claiming that “just about everyone and their sister filing an objection to the sale of AMS to Baker & Taylor –not that anything will stop it” they proved to be correct on the final part of that statement. PW Daily reports that AMS, the Creditor Committee and Baker & Taylor reached an agreement on the sale of certain AMS assets. Although other offers did come in for some of those assets, Baker & Taylor ‘s offer was deemed higher and better. The documentation, which is expected to be filed tomorrow, is being finalized.
In related news, as anticipated, Sontchi authorized sale-related payments to AMS senior management and retention pay for other AMS employees out of a Retention Plan Fund of $820,000. Employees offered commensurate employment by B&T or by an alternative purchaser are not entitled to retention bonuses. Radio Free PGW adds that B&T may want the entire Indy DC and the unsecured creditors’ committee wants a guarantee that PGW will have more than 20 days to get its stock out. Which is all just a long way of saying the story still has legs…
The dust may be settling on Perseus winning the auction to take over PGW publisher contracts, but the turmoil hasn’t stopped. Before getting to that, let’s wish PGW President Rich Freese a speedy recovery after he fell on stairs at his home Sunday night, breaking three ribs, an elbow and possibly damaging his hand. The good news, according to Shelf Awareness, is that there were no spinal or neurological injuries,
according to friends. He has had some difficulty breathing because of the broken ribs and asthma but may be released from the hospital as
early as today.
Meanwhile, Radio Free PGW is doing a yeoman’s job of staying abreast of every new development (and we’re hoping they don’t shut down on March 7 as threatened, but understand why this may be so.) Read on for their thoughts on PGW’s rejection offer of non-consenting publisher contracts (which they deem “mean-spirited and spiteful” and “a blatant attempt to strong arm and punish non-consenting publishers”) NBN’s still-standing 85 cents on the dollar offer for non-consentings, and why it’s bad news to be an AMS employee at the moment with the expected bloodbath at the ready in the wake of its impending buyout from Baker & Taylor , if no objections are filed with the bankruptcy court by February 28.
PW Daily’s Judith Rosen reports on a new wrinkle in the Koen Book Distributors bankruptcy, which took place in July 2005 and is still working its way through the courts. Soon after the distributor went under, Levy Home Entertainment stepped in to create Koen-Levy Book Wholesalers, which was run out of Koen’s former New Jersey warehouse using much of the same staff. But now that, too, is about to shut down. “We decided the business was not performing as anticipated, and it would not make its numbers in the foreseeable future,” Levy president and CEO Carol Kloster and senior v-p and CFO Steve Carlson told PW Daily. Most, if not all, the employees will be laid off, and publishers will be paid in full. Kloster and Carlson anticipate that it will take 90 days to fully close the facility.
If the Koen name sounds familiar to those new to the publishing and distribution game, perhaps its frequent mention of late at Radio Free PGW in relation to the AMS bankruptcy – and how Baker & Taylor handled its buyout of Koen warehouse stock – will ring a bell.
A flurry of stories preview tomorrow’s big auction day where Judge Christopher Sontchi will decide who has the better offer for Publishers Group West: Perseus or National Book Network. PW Daily reports, as does Publishers Marketplace, that NBN President Jed Lyons promised in a letter sent to publishers yesterday that if his bid for PGW contracts prevails, he would enter into a lease with the current landlord for the current AMS/PGW warehouse in Indianapolis rather than relocating the stock to the NBN warehouse. NBN will also keep a Bay Area presence and maintain a New York office and perhaps most importantly, keep the PGW name and logo.
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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