The outlook for Borders underwent a dramatic reversal late yesterday as the chain, responding to objections filed by both landlords and publishers, modified its bidding proposal to remove the offer made by Najafi Companies' BB Brands as the stalking horse bidder and replaced it with the bid by the liquidators. According to sources, in a meeting Wednesday evening between Borders, the publisher-led creditors committee and the judge, the chain agreed to modify its original proposal to meet the objections of publishers and landlords. As a result, if the judge approves the motion at Thursday morning's hearing, the liquidation group that includes Hilco Merchant Resources and Gordon Brothers will be in the lead position when the auction for Borders begins July 19. In papers filed this morning, Borders said it is continuing to solicit bids to acquire the company in a going concern sale as well as bids for a full liquidation, but unless another bid tops the offer by Hilco/Gordon, the liquidation of all Borders stores could start late next week. Bids are due by midnight July 17.
Following the notification of the change in strategy, Najafi issued a statement saying it was disappointed in the actions of the "deciding parties." Najafi said in the statement that it had been its intention to keep Borders intact, and that it remains "willing, ready and able to move forward should the deciding parties instead choose to work with us and our existing offer."
The results of the hearing will be included in the regular edition of PW Daily that will be delivered in early afternoon.