Borders Looks for Fresh Start After Chapter 11 Filing
It always seemed to be more a matter of when than
if Borders Group would file for Chapter 11 bankruptcy protection. Now that
the filing part has taken place, the question becomes who will be the winners
and losers when the saga plays out through Border’s reorganization and beyond?
announcement included plans to close 194 stores with the possibility of others
to follow. The company said it had secured $505 Million in debtor-in-possession
(DIP) financing from GE Capital.
"This financing should enable Borders to meet its obligations going forward
so that our stores continue to be competitive for customers in terms of goods,
services and the shopping experience. It also affords Borders the opportunity
to move forward in implementing the appropriate business strategy designed
to reposition Borders to be a potentially vibrant, national retailer of books
and other products," said Mike Edwards, president of Borders Group, in
a press release.
Borders’ management and board believes the company has a number
of strengths that will help it successfully compete once it emerges from Chapter
"For decades, Borders has been a beacon of engagement — a highly
frequented destination for consumers and a significant venue for authors and
vendors to showcase new books and merchandise. We have the ability, based on
our brick and mortar presence nationally; the on-line capabilities we have
in place; the loyalty of, and access to, our customers; and the products and
services we offer to be an important and easy access destination of exploration
and purchase for readers across the country," said Mr. Edwards.
Mr. Edwards was sounding upbeat, others were not.
"This is the biggest bankruptcy in the history of the book business," Albert
Greco, senior researcher at the Institute for Publishing Research, told The
Washington Post. "This is really a depressing day."
suggested that once Borders removes some of its unwanted store locations
that perhaps it will be acquired by larger rival Barnes & Noble. Borders
investor William Ackman had offered to finance a $963
million deal to acquire Barnes & Noble back in December.
continue to hold out hope that Borders’ trouble will be good for their businesses.
Norris, a senior analyst with Simba Information, told USA Today, "Independent
bookstores definitely have a shot at benefiting the most from store closures."
- Borders Group Files for Reorganization Relief Under Chapter 11 (PDF) – Borders
- Borders files for Chapter 11 bankruptcy; 4 Michigan stores among 200 to close
– Detroit Free Press
- Borders files bankruptcy and plans to close 30% of stores as book market
changes – The Washington Post
Files Bankruptcy, Is Closing Up to 275 Stores – Bloomberg News
- Borders’ loss may be others’ gain in book war – MSNBC
Discussion Questions: Will Borders successfully make it out of Chapter 11? Which retailers will be the biggest winners and losers as a result of this?