Borders on track for liquidation, P.R. exit likely
The decision Thursday by the U.S. Bankruptcy Court judge overseeing the Borders Chapter 11 proceeding could send the bookstore chain, which still has one location left in Puerto Rico, into a liquidation of its assets.
During a hearing, the judge approved the Ann Arbor, Mich.-based retailer’s petition to auction itself off with a team of liquidators putting up the first bid. Borders’ petition came after the offer presented earlier this month by private-equity investor Najafi Co.’s Direct Brands LLC, which owns Book-of-the-Month club of $215 million, and the assumption of $220 million in debt fell apart this week.
Borders said it will accept bids until 5 p.m. Sunday and will give notice by Monday if no other bidder emerges, the Associated Press reported.
Borders filed for bankruptcy protection in February, buckling to increased competition by discount chains and online bookstores, and a surge in the popularity of so-called e-books. At its peak, Borders ran about 1,000 stores — including three on the island — and is now down to about 400.
The stores that for the past several years operated in Carolina and Mayagüez were closed in April along with 235 others, as part of the significant downsizing implemented to try to salvage the company’s finances. The only location remaining is at Plaza las Américas, where mall officials have reportedly not been notified as to if or when the store will dissolve its lease.
Borders’ Chapter 11 proceedings took a turn this week, when its main creditors objected to Najafi’s offer, saying, among other things, that it did not represent a guarantee against it buying the chain and subsequently liquidating it for a profit. The group said a bid from liquidators Hilco Merchant Resources and Gordon Brothers, estimated at between $252 million and $284 million in cash, is a better proposition for the beleaguered retailer.
Najafi has said it will stand by its offer.