After limping along for the last six months, the bankrupt Borders Group Inc. will be closing down all of its remaining stores and shedding thousands of jobs. The Ann Arbor based company was the second largest bookstore chain in the US, but has been in sharp decline for the last several years and has finally decided to shut its doors completely.
Borders initially filed for Chapter 11 bankruptcy protection on February 16 and had been trying to survive ever since. The company had already cut thousands of jobs, closed 226 bookstores and has been in the process of renegotiating its leases on dozens of other stores.
The bookselling chain announced yesterday that it had decided to forego auctioning off its assets and instead will sell them off to a group of liquidators. Borders plans to ask a bankruptcy court on Thursday for approval of all closing procedures for a liquidation sale.
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Borders said that the company was forced to close down entirely rather than file for bankruptcy because it could not find a reasonable deal that would save its remaining 400 stores and 10,700 jobs.
Things took a turn for the worse last week, when a proposed deal to sell the company for $215 million to a private equity firm based out of Phoenix fell apart. Borders’ major creditors and landlords objected to the deal because the equity firm would have assumed $220 million in liabilities.
"Following the best efforts of all parties, we are saddened by this development," said Borders Group President Mike Edwards in a statement. "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, eReader revolution and turbulent economy, have brought us to where we are now."
A liquidation group led by Hilco Merchant Resources has already been picked and liquidations could begin as early as this Friday. The liquidation sale could generate up to $252 million to $284 million from selling the bookstores' remaining assets.