Filing: Source Interlink Owes Creditors $733 Million

Court docs reveal a who’s who of creditors.

By Bill Mickey
04/30/2009

According to court documents detailing Source Interlink's petition for a prepackaged Chapter 11 bankruptcy,
the company has debt of about $1.9 billion against assets of about $2.4
billion as of April 24. Its top 30 unsecured claims total about $733
million and include most of the country’s biggest publishers and
national distributors.

Source's bankruptcy filing effectively wipes away about $1 billion in debt and allows the company to go private.

The anonymously authored blog Dead Tree Edition points out
that publisher clients and national distributors in aggregate are owed
$200 million in trade debt. Listed among them are Bonnier ($2.4
million), Harris Publications ($1.8 million), American Media ($1.7
million), Future Publishing ($1.6 million), Playboy ($960,000),
Meredith ($881,000), Time Warner Retail ($75.5 million), Comag ($53.2
million), Curtis ($42.7 million), and Kable ($23 million).

The largest creditor is HSBC Bank, holding $455 million in note
debt, according to the documents. Behind that are the four national
distributors.

In the statement announcing the filing, Source CEO Greg Mays said
all vendors will be paid what they’re owed. “Importantly, all of our
vendors will be paid in full for both pre-petition and on going charges
according to our terms of trade. It's business as usual at Source
Interlink."

Earlier this year, Source was at the center of a massive magazine distribution lawsuit,
claiming rival wholesalers as well as publishers—like Time Inc.,
Hachette and American Media Inc.—were attempting to force the company
out of business.

Bauer, which Source has yet to settle with, is not listed among the top unsecured claims.