In the end, Borders went the way of other large retailers like Circuit City and Linens ‘n Things. At Thursday's hearing, Judge Martin Glenn said that he will enter the sales order for Borders’s liquidation and going-out-of-business sales starting Friday.
“This is a very bittersweet day in the history of this company,” said Borders attorney Andrew Glenn. “We obviously didn’t get to where we wanted it to be, a full going-concern sale. Let’s just hope that people are reading books after this.”
Glenn did have one late-breaking announcement, hinted at in Tuesday’s auction cancellation filing, that Books-A-Million is interested in purchasing 30 to 35 stores, which would save 1,000 to 1,500 jobs. Under the proposal, which is still “evolving” and unlikely to be resolved immediately, BAM would purchase the stores and additional inventory from Borders distribution centers as a bulk sale through the liquidators. It would pay a percentage of cost value.
If approved by the Creditors Committee (as well as DIP lenders and landlords), the proposal for more than 20 superstores along with small-format stores, would give BAM a significantly broader reach: north to South Portland and Bangor, Maine; closer to New York City in Atlantic City and Waterford, Ct., and west to Monterey, Calif. BAM would even take one store in Borders’s home state: Monroe, Mich. However, it’s not clear what revenue it will bring to the estate. Glenn estimated that it will be the same amount as a store closing. Under questioning from the judge, Creditors Committee attorney Bruce Buechler said that the Committee is mindful of the fact that jobs would be kept. He is still waiting to get a firm handle on the details of the deal. He also raised a concern about returns.
Borders’s intellectual property (the Borders name, Web site, and customer list), and the company’s shares in Kobo have not been sold, yet. That’s because the DIP lenders want a final order that pays them off. In order to do that, Borders is using its intellectual property as a lien to the liquidation group led by Hilco.
The nearly 90 objections filed earlier in the week were quickly dealt with during the hearing. As attorney Glenn noted, “We have worked literally around the clock since Monday to settle these issues.” That includes not just the assumption and assignment of leases but the concerns of taxing authorities and the duration of the going-out-of-business sales, which could continue for up to 16 weeks.