Liquidators approved as leading bidder for Borders
Liquidators are stepping in as the leading bidder for Ann Arbor-based Borders Group Inc., which is set to be auctioned off in bankruptcy proceedings on Tuesday.
A team of liquidators, led by Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC, received preliminary approval to become the "stalking-horse bidder" for Borders in a court hearing today in New York, Borders confirmed.
Borders employs nearly 400 workers at its Ann Arbor headquarters.
But that deal effectively collapsed Wednesday after objections by landlords and publishers, who told the court that Najafi's bid would not preclude the firm's Direct Brands unit from liquidating Borders' physical assets and keeping intellectual property for itself after the deal was sealed.
The publishers, speaking as a committee of unsecured creditors, told the court that if Borders is to be liquidated, they want the process to be handled by the liquidators Borders has already selected — not Najafi.
Other bidders for Borders could still emerge, including possibly Los Angeles-based private equity firm Gores Group, which had considered acquiring Borders, according to previous reports by the Wall Street Journal.
But if no one else comes forward, the liquidators may acquire the company and launch going-out-of-business sales as soon as July 22, according to court filings.
“We are focused on preparing for next week’s auction on July 19," Borders said in a statement this afternoon. "We are hopeful that Najafi Companies and other potential bidders who are interested in operating Borders as a going concern will choose to participate in the auction. In the meantime, as the process moves forward, we continue to conduct business as usual. Our stores remain open and serving customers and Borders.com is fulfilling orders.”
A complete liquidation of Borders would eliminate 11,000 jobs, including nearly 400 at the company's corporate headquarters in Ann Arbor, and 399 stores would close.
Borders, in a court filing, recently estimated that a liquidation of all of the chain’s assets would yield between $252 million and $284 million.
Borders filed for Chapter 11 bankruptcy in February with hopes of reorganizing and reemerging as a profitable company. But that plan fell apart as losses continued despite cutting more than 230 money-losing stores.
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
KJMClark
Sun, Jul 17, 2011 : 2:32 a.m.
In case anyone's still following this article, yesterday's Financial Times has a column about Amazon's tax cheating, and talks about Borders too: "It is the tax exemption, not the technology, that most distinguishes Amazon from its rivals. Its price advantage is the most important thing about it. The ruthlessness with which Amazon is resisting tax reform might be a measure of the centrality of tax-privilege to its business model. One can look at the collapse of Borders, not to mention independent booksellers, and ask whether government policy has undermined the bricks-and-mortar retail economy to protect a will-o'-the-wisp." [<a href="http://www.ft.com/cms/s/0/9dcfdd7c-af0b-11e0-bb89-00144feabdc0.html#ixzz1SKHrDjIF" rel='nofollow'>http://www.ft.com/cms/s/0/9dcfdd7c-af0b-11e0-bb89-00144feabdc0.html#ixzz1SKHrDjIF</a>]
hermhawk
Fri, Jul 15, 2011 : 11:04 a.m.
This is an example of what reckless management leads to. Reckless expansion and manipulative behavior leads to what is happening. When Barnes and Noble does better business than Borders in the latter's own backyard, red flags should be raised.
Roadman
Thu, Jul 14, 2011 : 9:26 p.m.
The Bankrupcy Court should not postpone the inevitable. Borders must be liquidated post haste. A painful but nescessary step in the economic processes.
grimmk
Thu, Jul 14, 2011 : 7:49 p.m.
Wow. Never thought I'd see the day. It would suck, no matter what, but it was based in Ann Arbor so it hits home more. I really will miss Borders.
KJMClark
Thu, Jul 14, 2011 : 7:25 p.m.
...Not to mention Amazon cheating on taxes to undercut the competition.
KJMClark
Sat, Jul 16, 2011 : 10:44 p.m.
Craig - I agree. I dutifully check the box on my tax form and send them the money for my family's on-line purchases. But it's part of Amazon's business strategy. One of these days the state governments are going to wise up and sign reciprocity agreements, and Amazon is going to lose that part of their advantage. Too late for thousands of brick and mortar businesses around the country, but at least the states will get their fair share again.
Craig Lounsbury
Fri, Jul 15, 2011 : 1:08 a.m.
Not to defend Amazon but sales tax is almost universally paid be the purchaser. The business is just the middle man for the state, collecting from the buyer and passing it on. In fact I think as Michiganders there is a spot on out State Tax return to declare purchases we make out of state and on the Internet. So we as citizens are as much to blame for not declaring it. We are the tax cheats just as much, perhaps more so.
FaithInYpsi
Thu, Jul 14, 2011 : 9:44 p.m.
Amazon had to move out of Dallas/Ft Worth since they wouldn't pay taxes. Just because you sell things on the internet doesn't mean you don't have to pay local taxes for what you sell locally.
KJMClark
Thu, Jul 14, 2011 : 9:08 p.m.
"Amazon, the Leader of the Tax Cheat Industry" <a href="http://www.cepr.net/index.php/blogs/beat-the-press/amazon-the-leader-of-the-tax-cheat-industry" rel='nofollow'>http://www.cepr.net/index.php/blogs/beat-the-press/amazon-the-leader-of-the-tax-cheat-industry</a> Conveniently, posted today.
Craig Lounsbury
Thu, Jul 14, 2011 : 8:52 p.m.
clarify?
Snehal Shah
Thu, Jul 14, 2011 : 5:43 p.m.
Classic example of what poor management and lack of foresight can lead to. RIP Borders. Sad to see you go but alas you became a victim of changing technology and trends which your top managers were unable to cope up with due to lack of their insight.
mw
Thu, Jul 14, 2011 : 9:35 p.m.
The best managed book superstore chain (B&N) will be the last to go -- just as the best-managed video store chain (Blockbuster) was the last. It was probably true that the best managed record-store chain hung on the longest, too. But technological change is what has brought Borders to this point -- inept management just hastened the process a bit. With an incredible amount of foresight and good luck, Borders (or B&N) might have *become* Amazon, but even if they had pulled off that feat, they'd still have eventually closed their physical book stores.