Borders liquidation approved by bankruptcy judge
NEW YORK (Reuters) - Borders Group Inc , won bankruptcy court approval on Thursday to liquidate its 40-year-old business, effectively spelling the end for the second-largest U.S. book retailer.
As many as 35 of the company's stores could continue to operate as bookstores in some form if a last-minute agreement with Books-A-Million Inc , the nation's third-biggest bookstore chain, can be reached.
Borders attorney Andrew Glenn said in court the two sides were still talking, but no agreement had been reached. The potential deal could save as many as 1,500 of Borders' nearly 11,000 total jobs, Glenn said.
When contacted by Reuters, Douglas Markham, Books-A-Million's chief administrative officer, declined to comment on whether the chain had made a bid.
Glenn said that, under the plan under discussion, Books-A-Million would acquire the inventory and merchandise at the included stores, then negotiate with landlords on leases. But the bulk of Borders stores will close in what Glenn called a "bittersweet" operation.
"There were a lot of sad people, a lot of sadness in the corporate office," Glenn told Judge Martin Glenn, no relation, at U.S. Bankruptcy Court in Manhattan.
A group of liquidators led by Hilco Merchant Resources and Gordon Brothers Retail Partners will sell off Borders' merchandise and furniture in a process likely to start as early as Friday and be completed by September, according to plans set out in court papers.
Borders will keep the rights to its brand name and leases and hold separate auction processes for those assets. Gordon Brothers unit DJM Realty will market the leases, although a timeline for that sale has not been set.
The agreement would likely bring in between $250 million and $284 million that the company can use to pay back creditors.
Borders, which helped pioneer the concept of book superstores, thought it had a buyer willing to keep the business alive when private-equity firm Najafi Cos, owner of the Book-of-the-Month Club, offered $215 million in cash and $220 million in assumed liabilities for the company.
But the deal fell apart amid objections from creditors, forcing the second-largest book retailer to announce plans to close its doors. Borders, founded in 1971, had hoped a "white knight" buyer would emerge, but it canceled a planned auction Monday night after receiving no bids.
The company declared bankruptcy in February, unable to overcome competition from larger rival Barnes & Noble Inc and from Amazon.com Inc , which began to dominate book retail when the industry shifted largely online. Borders also never caught up to its rivals' e-reader sales, namely Amazon's Kindle and Barnes & Noble's Nook.
Based in Birmingham, Alabama, Books-A-Million runs about 200 so-called "superstores" and another 30 smaller stores. The company's presence is concentrated most heavily in the southeast, but the Borders deal could expand its footprint: about half of the 35 stores that could be acquired are in the U.S. Northeast, including eight in Pennsylvania, three in Maryland and five in New England.