Bankruptcy Court Approves Sale of Nova Blue to ABC Imaging (Part 3)

In the “Part 2” post we did on Reprographics 101 (on Dec 13^th) about the Bankruptcy Court’s approval, on Dec 6^th, of ABC Imaging’s offer to purchase *Nova Blue (collectively, Nova Blue, Inc. and Nova Blue Reprographics, Inc.) we pointed out that there’s a waiting period involved in a deal of this sort. Here’s what I learned from the Purchase & Sale Agreement: From paragraph 1.5, “Closing”, in the Purchase & Sale Agreement: “The consummation of the transaction contemplated herein shall be as soon as practicable following the grant of judicial approval for this agreement and the expiration of all appeal periods for any such order and in any event by December 23, 2011.”

*(Note, ABC Imaging is buying assets, not stock, and ABC Imaging is not assuming any of Nova Blue’s liabilities. Just wanted to clarify this.)

One major flaw in the write-up I did about ABC Imaging - - I failed to point out that ABC Imaging is acquiring Nova Blue’s “Accounts Receivable”. I would imagine that the Trustee agreed to include Nova Blue’s A/R in the ABC deal “simply because” that will avoid him from having to collect Nova Blue’s receivables; as you all well know, that sort of activity is a huge pain in the ass; that's doubly the case for a company in bankruptcy, where the company no longer conducts operations. I doubt that any outsider will ever know the total amount of A/R that ABC ends up taking over or the total amount that ABC actually ends up collecting, and I’m not going to take a stab at estimating those numbers, because doing that sort of research would be a waste of my time. But, do realize that the actual amount of Nova Blue A/R that ABC Imaging does eventually collect will, for all intents and purposes, reduce the “net effective” purchase price ABC Imaging paid for Nova Blue. (e.g., ABC Imaging is paying $430,000 cash for Nova Blue’s assets, and, if ABC Imaging eventually collects $100,000 from Nova Blue’s A/R, ABC’s “net effective” purchase price will end up being $100,000 less than the $430,000 initially paid by ABC. Even a better deal for ABC Imaging than I previously wrote in Parts 1 and 2 of our coverage of the deal.)