In a letter sent shortly after the quick end of Wednesday’s omnibus hearing, Borders CEO Mike Edwards once again called on publishers to renew shipping titles to the crippled retailer on normal terms. While a number of independent presses have begun supplying Borders on a 30-day payment schedule, the larger houses have not altered from shipping on a cash basis only. In his letter, which went to all vendors for which Borders does not have terms, Edwards wrote that while Borders has accomplished a lot since the Chapter 11 filing “our next critical step on our path towards successful emergence {from bankruptcy} is to secure reasonable trade credit and support.”
The extension of trade terms by our vendors, Edwards continued, “is a crucial component to securing our viability, as it not only leverages Borders’ existing liquidity, but also demonstrates to the company’s lenders, business partners, and customers a show of support from all of you.” Edwards said he understands that the Borders’s bankruptcy has had a “significant financial impact” on its vendors’ businesses, but emphasized that there is less risk in extending Borders credit now since, under bankruptcy rules, the company “is obligated to meet its credit terms with you and you receive, on a dollar-for-dollar basis, ‘administrative’ claim status, which is the company’s highest level of unsecured repayment obligation.” Edwards noted Borders can confirm no bankruptcy plan that does not provide for the payment in full in cash of any outstanding post-bankruptcy credit.
In the letter, Edwards downplayed the chance of a sale for all or parts of Borders, saying that while the retailer has “received expressions of interest from parties interested in certain of our assets, we remain confident that the business plan we have developed remains the best path forward. As a result, we are moving ahead aggressively to secure necessary financing to successfully exit Chapter 11 as quickly as possible.”
Edwards also looked to assure Borders that it is ready to implement new store initiatives. “Over the next three months, we will execute on our merchandising plan by re-setting all our stores to begin to reflect the reader- centric environment our customers’ desire. In addition, we will also roll out our new strategic relationship with Kobo which will provide us additional revenue, a more competitive e-library and increased functionality for the Kobo, our primary e-reader,” Edwards wrote.
