Will Borders Finally Go Belly-Up?
July 15, 2011
By this time next week, we will know whether or not Borders, the beleaguered, bankrupt bookstore chain will continue to exist. Many are amazed that it continues to exist today. Battered by Amazon's Kindle e-books and unable to keep up with the not-particularly-healthy-itself Barnes & Noble, the company, which was recently pared down dramatically to a mere 400 or so locations, failed to reach an agreement with its creditors that would sell it to a Phoenix based private equity firm led by Jahm Najafi. The sticking point was a clause that would have allowed Najafi to liquidate the company, so a bankruptcy court judge ruled yesterday that unless a more suitable suitor presents itself, the company will be auctioned on Tuesday July 19th with a different liquidation firm as the opening "stalking horse" bidder. If no other bidders emerge, it will be the default winner.
Both the Borders and its creditors would like to see it continue as a going concern, but with publishers holding deliveries for advance cash payments, that prospect seems less likely by the minute. There are all sorts of complicated scenarios regarding how and when the company's assets will be divided and sold, but the bottom line seems to be that if the company remains in business, it will be as a result of some sort of business miracle.
What does this mean for New York? Since Borders already closed three of its stores here earlier this year, the remaining two, at Penn Plaza and Columbus Circle, will likely go dark after some messy liquidation sales. To be perfectly honest, the thing we will miss most will be the Dean & Deluca counter at the Columbus Circle store. There are reports that Barnes and Noble could take over certain locations, and those two could be prime candidates, but that depends on all sorts of variables.
The question we are left with is, what stores will go into those two high-profile retail spaces?
Fate of Borders Hangs in Balance This Weekend (The Wall Street Journal)