In total, RDA owes $17.4m to print companies, including US-based printers Quad/Graphics, owed $3m, RR Donnelley, owed $2.4m, and Quebecor World, owed $2.3m, and China-based Hung Hing Offset Printing, owed $831,600.
Under Chapter 11, priority is given to payments for goods and services received after the filing date, whilst the debtor is precluded from making payments relating to goods and services received prior to the filing date.
This means that in order for RDA to repay any trade debt accrued prior to 24 August, the amounts must fall within certain narrowly prescribed categories under relief requested by RDA and agreed by the court.
However, RDA has already filed a Critical Vendor Motion requesting the authority to make up to $25m worth of critical vendor payments and up to $8m on the prepetition claims of certain other creditors.
In the motion, the RDA argued that any disruption to its "highly sensitive supply chain" could harm its business and said it expected to have to satisfy some of the claims earlier than would normally be expected in the Chapter 11 process.
In an open letter to its US vendors, RDA stressed that businesses that continued to supply goods and services to the publisher after 24 August would be paid in the ordinary course.
The company added: "Generally, payment of pre-petition indebtedness will be settled as part of our Plan of reorganisation, and we are committed to reaching the best possible terms."
Williams Lea declined to comment.
For more information see www.rdarestructuring.com
Printers owed $17.4m following Reader's Digest Chapter 11 filing
Williams Lea has emerged as one of the largest unsecured creditors of Reader's Digest Association (RDA), with a claim amount of $8.9m (5.4m), after the latter filed for Chapter 11 bankruptcy protection on Monday (24 August).