In the end, even filing for bankruptcy and trying to reorganize the business couldn’t save Borders Group Inc.
After no last-minute higher bids were submitted by a court deadline today, Borders, No. 200 in the Internet Retailer Top 500 Guide, is liquidating.
Last week, the creditor committee overseeing the bankruptcy plan for Borders rejected a bid from Direct Brands as being too low. On July 1 Borders entered into a preliminary agreement to be sold at an upcoming auction to Direct Brands, a portfolio company of Najafi Cos., an investment banking firm based in Phoenix, for about $215.1 million in cash and the assumption of about $220 million in debt. Direct Brands submitted a stalking horse bid, which is an initial bid on a bankrupt company's assets from an interested buyer chosen by the bankrupt company that sets the floor for minimum acceptable bids.
With no higher bidders stepping forward the U.S. Bankruptcy Court for the Southern District of New York has approved the sale of store assets to Hilco Merchant Resources and Gordon Brothers Group, a pair of retail liquidation firms.
Hilco and Gordon will begin to close about 200 of Border’s remaining stores through the end of September, says Borders. Hilco and Gordon now also own all of the retailer’s intellectual property rights, including Borders.com. It’s unclear when the chain will cease e-commerce operations.
"For decades, Borders stores have been destinations within our communities, places where people have sought knowledge, entertainment and enlightenment, and connected with others who share their passion,” says Borders group president Mike Edwards. “Everyone at Borders has helped millions of people discover new books, music, and movies, and we all take pride in the role Borders has played in our customers' lives."
Borders filed for bankruptcy in January and listed assets of $1.27 billion and total debts of $1.29 billion in its bankruptcy filing. Several book publishers are among those left holding Borders IOUs. Borders owes $41.1 million to Penguin Putnam Inc., $36.8 million to Hachette Book Group, $33.7 million to Simon & Schuster Inc., $33.4 million to Random House, and $25.8 million to Macmillian/MOS.
"Following the best efforts of all parties, we are saddened by this development," says Edwards. "We were all working hard towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, e-reader revolution, and turbulent economy, have brought us to where we are now."