Borders’s 11th-hour amendment to its DIP facility to prevent the closing of 50 stores was approved after some hesitation at this morning’s bankruptcy hearing. Judge Martin Glenn called the million-dollar fee that Borders is paying for the extension a bitter pill. “I’ll approve it with reluctance,” he said. “I think you’re getting raped is the best way I can describe it. The other side of the coin is, it’s the only game in town. It’s very close to me saying no.”
Glenn's approval clears the way for Borders to continue to talk with potential buyers with the chain's store base still intact. Borders had said that if the amendment was not approved it would be in default of its lending agreement and be faced with the prospect of immediate liquidation.
The dates for the dual track process in which Borders solicited liquidations bids by June 17, while it continues to seek a stalking horse bidder by July 1 for a going concern sale didn't make the judge much happier. He expressed concern about the brief time proposed between a July 14 hearing on bid procedures and bidding to be conducted later that day as well as on the breakup fee. “I’m very concerned that all these pieces fit together in the short time that’s available,” said Glenn.
Borders’s attorney Andrew Glenn of Kasowtiz, Benson, Torres, & Friedman LLP attempted to mollify Judge Glenn by saying that his firm will file an asset purchase agreement and bidding procedures motion on June 30. Given the circumstances, the Creditors Committee had no objections to the amendment or procedures. The goal of the extension of the lease agreement is to maximize the value of the estate, even though it’s likely even the going concern bidders won’t be buying every single store.