Borders Forced to Liquidate, Close All Stores
By MIKE SPECTOR And JEFFREY A. TRACHTENBERG
Borders, which employs about 10,700 people, scrapped a bankruptcy-court auction scheduled for Tuesday amid the dearth of bids. It said it would ask a judge Thursday to approve a sale to liquidators led by Hilco Merchant Resources and Gordon Brothers Group.
The company said liquidation of its remaining 399 stores could start as soon as Friday, and it is expected to go out of business for good by the end of September.
Borders filed for bankruptcy-court protection in February. It has since continued to bleed cash and has had trouble persuading publishers to ship merchandise to it on normal terms that allowed the chain to pay bills later, instead of right away.
"Following the best efforts of all parties, we are saddened by this development," said Borders President Mike Edwards. "We were all working hard toward a different outcome, but the head winds we have been facing for quite some time, including the rapidly changing book industry, [electronic reader] revolution and turbulent economy, have brought us to where we are now."
Borders's best chance for survival fell apart last week when talks with private-equity investor Jahm Najafi to buy the company collapsed. Borders scrambled unsuccessfully over the weekend to find other potential buyers who would keep the chain alive.
The chain's demise could speed the decline in sales of hardcover and paperback books as consumers increasingly turn to downloading electronic books or having physical books mailed to their doorsteps.
"When you lose literally miles of bookshelves, it's going to have an impact," said David Young, chief executive of Lagardère SCA's Hachette Book Group, which Borders owed $36.9 million at the time of its bankruptcy filing. "I hope other retailers will now step up and make offers for what they consider to be the prime sites," Mr. Young said. "It's a tragedy Borders didn't make it through."
The loss of Borders may also make it more difficult for new writers to be discovered. "The liquidation of Borders is an irreplaceable loss of a big part of the book-discovery ecosystem," said Michael Norris, a senior analyst at Simba Information, a unit of MarketResearch.com "Thousands of people whose job consisted of talking up and selling books will eventually being doing something else, and that's bad for authors, agents, and everyone associated with the value chain in books."
Mr. Norris said other booksellers, including Barnes & Noble Inc. and Amazon.com Inc., will go after the shoppers who formerly considered themselves Borders customers. "They won't be able to pick up everyone," he added. "If shopping at your local Borders is part of your weekly routine, and then Borders is gone, you may end up doing something other than buying books."
Write to Mike Spector at email@example.com and Jeffrey A. Trachtenberg at firstname.lastname@example.org
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