Advanced Marketing creditors committee says DIP will burden company, may reduce liquidity

By Caroline Salls

Pittsburgh, Jan. 26 - Advanced Marketing Services, Inc.'s official committee of unsecured creditors objected to the company's request for debtor-in-possession financing, saying the DIP will burden the company with fees and may reduce liquidity, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

According to the objection, although the DIP is supposed to provide the company with up to $75 million in financing, the primary purpose of the loan is to roll-up a pre-bankruptcy loan into the DIP, leaving the company with limited new money.

The committee also said a $750,000 non-refundable DIP fee, the lender's entitlement to payment of fees and expenses and a $2 million carve out for professional fees and other potential reserves may leave the company with limited availability for operations.

The committee said all the company will receive under the DIP is the limited use of cash collateral and the loss of many rights.

Advanced Marketing, a San Diego-based provider of customized merchandising, wholesaling and contract distribution services, filed for bankruptcy on Dec. 29. Its Chapter 11 case number is 06-11480.

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