Advanced Marketing Services Inc., the bankrupt former book distributor for warehouse retailers Sam's Club (WMT:US) and Costco Wholesale Corp. (COST:US), won court approval of its bankruptcy liquidation plan.
U.S. Bankruptcy Judge Christopher Sontchi in Wilmington, Delaware, signed the order today allowing the company to pay creditors, including publishers Random House Inc. and Simon & Schuster Inc., from 29 cents to 100 cents on the dollar on about $100 million in debt.
Advanced Marketing's bankruptcy went ``from what could only be described as a free-for-all fire sale to what is an orderly liquidation,'' Sontchi said in approving the plan today.
Advanced Marketing and its major subsidiaries, Publishers Group Inc. and Publishers Group West Inc., filed for bankruptcy Dec. 29, three years after the U.S. Justice Department and the U.S. Securities and Exchange Commission began probing its financial reporting and advertising practices, according to court papers. The company has resolved all pending shareholder suits.
Under the plan, creditors who own debt backed by the company's assets will be paid in full, as will the unsecured creditors of Publishers Group West, who are owed from $8 million to $10 million, company attorney Suzzanne Uhland said in an interview after the hearing. Advanced Marketing creditors are owed about $100 million, Uhland said.
Unsecured creditors of San Diego-based Advanced Marketing will be paid between 29 cents and 42 cents on the dollar, according to court documents.
The money to be used to pay the company's debts will come from the sale of most of its assets to rival Baker & Taylor Inc.
Baker & Taylor, based in Charlotte, North Carolina, agreed in March to buy the assets for $20 million in cash, plus an amount to be based on the value of Advanced Marketing's debts and book inventory, according to court papers. Baker & Taylor said in court documents that it has paid $57.8 million under the original purchase agreement.
Founded in 1982, Advanced Marketing sold books through warehouse retailers such as Wal-Mart Stores Inc.'s Sam's Club and Costco. Baker & Taylor is owned by New York-based private-equity firm Castle Harlan Inc.
The case is In re Advanced Marketing Services Inc., 06-11480, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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