The bankruptcy court on Wednesday approved Borders's DIP motion, giving the chain at least $450 million to fund its ongoing operations. Papers filed with the court order also provided some indication of how Borders believes the downsizing of its operations will impact its spending and cost requirements through June. Also yesterday, the court approved early rejections of five more leases.
The approval of the DIP motion was expected. The DIP budget submitted as part of Borders’s motion shows were the company believes it will be in June. The last disbursements from the going-out-of-business sales are expected to take place the week of April 2, according to the document. Borders’s two-week payroll schedule shows payroll peaking the week of March 26 at just under $10 million and falling to $5.8 million the week of June 18. Store operating expenses as well as general & administration expenses, which will average about $4.5 million through March, are projected to average about $2.6 million per week in June. Spending on merchandise is expected to be between $18 million to $23 million through mid-April before falling off to around $10 million through May and rising again to the $15 million to $17 million range in June.
Borders wasted no time following up on an order for rejecting leases, which was signed by Judge Martin Glenn yesterday. Within hours of the signing, the retailer submitted its first leases for rejection through the court docket. Altogether it is seeking to reject five leases. Four of the locations currently have subtenants: Paramus Towne Square in Paramus, N.J.; Maryland Parkway in Las Vegas; Kendall Mall in Miami; and Great Northern Blvd. in N. Olmsted, Oh. The fifth rejected lease, which doesn't expire until 2024, is for a location in Chicago's Hyde Park. Affected parties have ten days to file an objection.
In a separate filing Wednesday, Borders contributed to speculation that it may look to a sale to emerge from bankruptcy. The court approved a motion appointing Jeffries and Company as its investment banker, but note that the company will only be paid under certain circumstances. “Jefferies shall be entitled to a Liquidation Fee with respect to any sale or liquidation of assets (whether pursuant to a Chapter 11 plan, Section 363 of the Bankruptcy Code or otherwise) if, and only if, Jefferies ran a sale process with respect to such assets and/or marketed such assets or investment concerning such assets and/or otherwise provided material services in connection with the sale or liquidation of such assets,” the order stated.