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A bankruptcy court judge clears the way for liquidation of the bookseller.
Time is running out for the present organization of Borders Group Inc.
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.
But now the creditor committee overseeing the bankruptcy plan for Borders, No. 200 in the Internet Retailer Top 500 Guide, has rejected the bid from Direct Brands as being too low. That led Direct Brands and Najafi to withdraw their bid. “We regret to confirm that Direct Brand’s proposed agreement to keep Borders operating is no longer supported by the deciding parties,” says Najafi. “The deciding parties’ legal team and financial advisors have elected another option which is in contrast to what we had envisioned for the future of Borders.”
With the withdrawal of a stalking horse bid, the U.S. Bankruptcy Court for the Southern District of New York is now considering other bids and will hold an auction for the assets of Borders on July 21.
If higher bids aren’t forthcoming, the bankruptcy court also gave Borders the option to begin liquidating its assets, including inventory and intellectual property, which would include Borders.com.