The confusing dissolution of Borders bookstores
Poor Borders. Once a major rival to Barnes & Noble, it now is in bankruptcy and facing liquidation. The fate of Borders will play out this weekend, with a possible auction looming Tuesday.
Borders had been in talks with a single private equity firm, Najafi, whose bid was rejected by unsecured creditors Wednesday. Those creditors -- which include Penguin, HarperCollins, Random House and Perseus Books Group -- were concerned that they might not be appropriately compensated after a low Najafi takeover bid, because the private equity firm could later liquidate Borders without them benefiting.
Talks with Najafi dissolved after an all-night negotiating session failed to hammer out an agreement that would have mandated the firm continue to operate Borders as a going concern, Bloomberg reports. Among the major creditors are landlords for the remaining 405 bookstores Borders still operates (it has closed 237 stores), and their concerns about broken leases were among those that led to the latest surprising wrinkle in the case.
Najafi may still bid in a possible upcoming auction. The company is the owner of Book-of-the-Month Club.
Side note: apparently yes, there is still a Book-of-the-Month Club.
Next up is the prospect of liquidation, provided nothing changes before a Sunday deadline. An auction is planned for Tuesday and a court hearing about a final deal is scheduled for Thursday. "Everybody will get their day in court, or night in court," said U.S. Bankruptcy Judge Martin Glenn. "We will do everything necessary."
The exact shape of the liquidation has not yet been determined -- but it's still possible that Borders' bankruptcy might not reach the liquidation stage.
-- Carolyn Kellogg
Photo: Borders Books in Ann Arbor, Mich. Credit: Carlos Osorio / Associated Press