Advanced Marketing Services, which endured financial scandal for the
past three years, hit a new low when it filed for Chapter 11 bankruptcy
on Friday. The catalyst for the filing was the decision by the
company's major creditor not to extend its most recent loan beyond last
Thursday.
AMS's traditional business has been acting as a wholesaler for warehouse clubs. Among other things, it owns distributor PGW and offers wholesaling, distribution and marketing services. The bankruptcy filing does not affect AMS subsidiaries in the U.K., Australia and Mexico.
Pending bankruptcy court approval, AMS has obtained $75 million in debtor-in-possession financing from Wells Fargo Foothill. This should provide "sufficient liquidity to meet the company's ongoing operating needs during the proceeding," AMS said. The company continues to pursue "strategic alternatives," which could include selling the company or refinancing.
In response to the news, shares of AMS, which were once traded on the New York Stock Exchange but were delisted and now trade on the pink sheets in the OTC market, dropped 81% to 50 cents from $2.60.
AMS defaulted on the loan by "failing to file timely audited financial statements," according to the San Diego Union-Tribune. "The company's auditors have not completed the audit of AMS's financial statements for fiscal 2004, 2003 or 2002, nor has AMS filed any annual or quarterly reports for fiscal 2004, 2005, 2006 or 2007."
Three former AMS executives have been convicted for fraud in connection with exaggerating profits and fraud related to the company's advertising.
The Union-Tribune reported that in the bankruptcy filing, AMS listed both assets and debts of more than $100 million. Its biggest unsecured creditor is Random House, which has a claim of $43.3 million. Last year, the company estimated it would have fiscal 2007 sales of between $700 and $750 million.
AMS's traditional business has been acting as a wholesaler for warehouse clubs. Among other things, it owns distributor PGW and offers wholesaling, distribution and marketing services. The bankruptcy filing does not affect AMS subsidiaries in the U.K., Australia and Mexico.
Pending bankruptcy court approval, AMS has obtained $75 million in debtor-in-possession financing from Wells Fargo Foothill. This should provide "sufficient liquidity to meet the company's ongoing operating needs during the proceeding," AMS said. The company continues to pursue "strategic alternatives," which could include selling the company or refinancing.
In response to the news, shares of AMS, which were once traded on the New York Stock Exchange but were delisted and now trade on the pink sheets in the OTC market, dropped 81% to 50 cents from $2.60.
AMS defaulted on the loan by "failing to file timely audited financial statements," according to the San Diego Union-Tribune. "The company's auditors have not completed the audit of AMS's financial statements for fiscal 2004, 2003 or 2002, nor has AMS filed any annual or quarterly reports for fiscal 2004, 2005, 2006 or 2007."
Three former AMS executives have been convicted for fraud in connection with exaggerating profits and fraud related to the company's advertising.
The Union-Tribune reported that in the bankruptcy filing, AMS listed both assets and debts of more than $100 million. Its biggest unsecured creditor is Random House, which has a claim of $43.3 million. Last year, the company estimated it would have fiscal 2007 sales of between $700 and $750 million.