Downloadable PDFs of Borders bankruptcy filing and a list of store closures.
After a drawn out process that began at the end of last year when it missed payments to top publishers, Borders Group has given in to the inevitable and filed for Chapter 11 bankruptcy protection in Bankruptcy Court for the Southern District of New York.
As Borders runs out of options and prepares to file for Chapter 11 bankruptcy protection, GE Capital, which committed to providing $450 million debtor-in-financing credit, is trying to limit its exposure, according to one major publisher.
With nearly every major news organization reporting that Borders will file for bankruptcy this week, the question among publishers is becoming more and more can the chain avoid a Chapter 7 filing that would result in the liquidation of the company.
As another week comes to a close, the situation at Borders remains status quo--at least for the moment. Ingram continues to be the chain's lifeline to the publishers, continuing to ship books while few publishers are. There was no movement among publisher in accepting Borders proposal to exchange missed payments for notes, and publishers, like the rest of the industry, are waiting for the next shoe to drop.
With Bloomberg and the Wall Street Journal both reporting that Borders could file for bankruptcy next week, publishers have started speculating about why the process will take that long.
Borders announced Sunday evening that it was delaying January payments to vendors and landlords in a move to conserve cash. The action will almost certainly end any hope Borders has of winning approval from publishers of its proposal to exchange missed December payments for notes.
Borders announced Thursday evening that GE Capital has agreed to provide the company with $550 million in new financing, but the deal is subject to a number of conditions, including receiving $125 million in financing from publishers and other vendors.
Unless publishers undergo a change of heart, it appears likely that many will reject Borders’ proposal to exchange missed payments for notes. According to several sources, Borders wanted another meeting with publishers this week, but was turned down.
After a meeting between publishers and their financial advisor earlier this week, publishers were told that the Borders offer was at least worth considering.
The downsizing of Borders continued yesterday with the news that it laid off 45 employees--40 at corporate headquarters and five in its distribution centers. According to employee message boards, Borders CEO Michael Edwards is expected to make an announcement Wednesday, although a company spokesperson said nothing is scheduled.
