ANN ARBOR, MICH. — After struggling to maintain market share and meet its debt obligations, Borders Group has filed for Chapter 11 bankruptcy protection. In its filing with the U.S. Bankruptcy Court, the Ann Arbor-based bookstore chain lists debts of $1.29 billion and assets of $1.28 billion. Borders Group operated the Borders chain of bookstores as well as Waldenbooks, Borders Express, Borders Outlet and Bordders.com.
In a statement Mike Edwards, president of Borders Group, said, “It has become increasingly clear that in light of the environment of curtailed customer spending, our ongoing discussions with publishers and other vendor-related parties, and the company's lack of liquidity, Borders Group does not have the capital resources it needs to be a viable competitor and move forward with its business strategy to reposition itself successfully for the long term.”
Borders will continue to operate its business normally. However, the statement reads that 30 percent of the chain's locations will close by April 30. On the list of the 190 stores to be closed — subject to court approval — are many high-profile locations including Biltmore Fashion Park in Phoenix; Union Square in San Francisco; Santana Row in San Jose, Calif.; The Domain in Austin, Texas; and Westfield Century City in Los Angeles. The company has hired DJM Realty to manage the dispositions of the properties.
GE Capital, Restructuring Finance has committed $505 million in debtor-in-possession financing to help the company meet its financial commitments. Last month, GE also provided a $550 million senior secured credit facility that replaced the company's previous revolving senior credit and term loan facilities.
According the reports, Borders has lost more than $3 billion in market share since 1998. The company announced last month it would close some of its stores and eliminate staff. Its CEO, Ron Marshall, also resigned, and Edwards was named interim CEO.
“This decisive action will give Borders the opportunity to achieve a proper infusion of capital in order to [reorganize and reposition] itself to be a successful business for the long term,” Edwards said.
— Randy Shearin and Coleman Wood