No Storybook Ending for Borders Group
In that press release, Borders Group President Mike Edwards stated, "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 which are essential for it to move forward with its business strategy to reposition itself successfully for the long term. To position Borders to remedy this condition, Borders Group, with the authorization of its board of directors, has filed a petition for reorganization relief under Chapter 11 of the Bankruptcy Code. This decisive action will give Borders the opportunity to achieve a proper infusion of capital in order to have the opportunity to have the time to reorganize in order to reposition itself to be a successful business for the long term.”
Since then, several attempts have been made to save Borders from complete demise. A June 30 press release from Borders announced that the company had entered into a preliminary agreement with Direct Brands, a portfolio company of Najafi Cos. According to the press release, the agreement would have allowed Direct Brands' purchase of nearly all Borders assets for $215.1 million, as well as its assumption of about $220 million of liability. The deal was meant to save a significant number of Borders stores from closing. However, as reported by BusinessWeek.com, Najafi decided not to make the bid for Borders after refusing to drop the option to liquidate.
A few weeks later, on July 18, Borders announced in a press release that it would submit a proposal from liquidators Hilco Merchant Resources and Gordon Brothers Group to the court for approval, allowing Hilco and Gordon to purchase all remaining Borders stores and assets, and begin the liquidation process.