Borders racing to meet deadline for sale as liquidation looms as possibility
The climax of Ann Arbor-based Borders Group Inc.'s bankruptcy process is drawing close — and the outcome will determine whether the bookstore chain is sold and stays in business or is forced to liquidate.
Borders still employs close to 400 workers at its Ann Arbor headquarters.
Melanie Maxwell | AnnArbor.com
But the company has only until July 1 to secure and reveal a "stalking horse" bid for a substantial portion of its assets. That would establish a single entity as the leading bidder for the company, setting the bar for all other potentially interested acquirers.
Borders, in a court filing Friday, said that if it isn't sold, it would be forced "to halt operations and liquidate on an expedited basis, with the attendant loss of value to the estates, recoveries to unsecured creditors and thousands of jobs."
A liquidation of the company would affect the 11,000 people who still work at the company's more than 400 stores nationwide and the nearly 400 workers still employed at its Ann Arbor headquarters.
Los Angeles-based Gores Group and Phoenix-based Najafi Companies — both private equity firms — are both considering a bid for most of Borders' stores, according to previous reports by the Wall Street Journal.
Meanwhile, the bankruptcy judge, Martin Glenn, told Borders attorneys today that the bookstore chain was being mistreated by lender GE Capital, according to a Reuters report. GE recently required Borders to pay $1 million for the right to adjust its bankruptcy financing agreement.
"I think you're getting raped, is the best way I can describe it," Glenn said, according to Reuters.
If Borders successfully sells itself to a private equity firm, it's unclear what will happen to the company's Ann Arbor headquarters, which employs close to 400 workers. Borders, which filed for bankruptcy in February, has previously said it is considering a move out of Ann Arbor.
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
Jon Saalberg
Sat, Jun 25, 2011 : 2:37 a.m.
Tick tock. My wife and I stopped by the downtown Borders Friday night, and by the look of things, liquidation seems to already be in progress - many shelves upstairs were empty and in fact, were for sale, with "Store Fixtures For Sale" signs on them. Shelves in disarray and not stocked. Floors dirty, in need of vacuuming. Only a couple of employees visible. Very sad.
Huron74
Thu, Jun 23, 2011 : 2:20 p.m.
Add Borders to the list of companies that aren't politically connected and so are not considered "too big to fail". Now if Borders management had just encouraged the UAW or some other politically connected union to represent their employees (like the auto companies) then Obama would have run screaming to bail them out and they'd be fine now.
Jon Saalberg
Sat, Jun 25, 2011 : 2:34 a.m.
I think you are confusing making products with selling products, and additionally, with being an integral part of American business. Borders just sells books and associated items, which you can buy anywhere on the Internet. Cars are a manufactured good that you cannot easily buy using the Internet, and the car companies employee hundreds of thousands of workers, and more, if you include their associated suppliers. Their collective vaporization would have had a catastrophic affect on the U.S. economy. The disappearance of Borders is sad, but it is hardly going to affect the U.S. economy.
15crown00
Thu, Jun 23, 2011 : 1:37 p.m.
it's not if it's when it will happen.board the joint up,lock the door for the last time on the way out. Then leave for the last time.Be gone for good.
johnnya2
Thu, Jun 23, 2011 : 1:46 a.m.
""I think you're getting raped, is the best way I can describe it," Glenn said, according to Reuters" Can I just ask that once and for all people stop using the term rape to describe a bad deal? Sexual assault and a bad business deal are a far cry from each other especially in a legal setting. While I am at it, not every scandal in the world needs to end in "gate". The only reason Watergate was named that was because that was the actual name of the hotel. Why does every scandal in every situation have to have gate attached at the end?
Useless
Wed, Jun 22, 2011 : 7:04 p.m.
This is sad - how the mighty have fallen. I guess the lesson is, you must change with the market or the market will devour you.