On December 29 Advanced Marketing Services (AMS), the owner of the independent press distributor Publishers Group West (PGW) and the primary supplier of books to the Costco, Sam’s Club, and BJ’s Wholesale Club chains of stores, filed for bankruptcy in a Delaware court. AMS cited the refusal of its bank, Wells Fargo, to extend a loan agreement that had provided cash for the company’s day-to-day operating expenses as the primary reason for declaring bankruptcy. The filing may allow AMS to avoid paying some of its creditors, which include hundreds of commercial and independent book publishers.
AMS's current debt to publishers totals several hundred million dollars. While commercial publishers, such as Random House, Simon & Schuster, and Penguin, are each owed between twenty and forty-five million dollars, the independent presses distributed by PGW may be hurt more by the bankruptcy, since the unpaid money represents a much larger percentage of their revenue. PGW, which was bought by AMS in 2002, provides warehousing and distribution, shipping, and billing and collections for over a hundred independent publishers, including Carroll & Graf, Grove/Atlantic, McSweeney’s Books, Seal Press, Soft Skull Press, and Tin House Books. As of this writing it is unknown whether those publishers will receive any part of their sales revenue from the final quarter of 2006, or whether they will be able to access inventory that PGW is currently storing for them.
In 2003 AMS was accused of improper accounting practices and faced investigation by the FBI and the Securities and Exchange Commission (SEC), which led to the prosecution of several senior executives.