bankruptcy

Stateside: What would a Detroit bankruptcy bring?

Michigan Radio Newsroom — Wed, 05 Dec 2012 22:23:46 +0000

As the prospect of a Chapter 9 Bankruptcy looms over Detroit, many are wondering what will become of the city.

We spoke with Forbes.com contributor Micki Maynard and the Detroit News' Daniel Howes about restructuring the city and those who run it.

“It would be very difficult for the image of the city. It would be the largest municipal bankruptcy in the history of the country. It would probably last three years and be very unforgiving to the employees and residents,” said Howes.

Howes insisted that taxpayers would mostly likely have to fund the restructuring of the city.

Is bankruptcy a good option for Detroit?

Jennifer White — Fri, 03 Feb 2012 21:40:06 +0000

The city of Detroit continues to try to find a way out of its fiscal crisis.

A new report led by Michigan State University economist, Eric Scorsone, examines the impact of a bankruptcy on the city – something Governor Snyder, the legislature and the city leaders want to avoid.

Borders closes: 10,700 workers to lose jobs

Jennifer Guerra — Tue, 19 Jul 2011 14:53:37 +0000

After 40 years in the business, the national bookstore chain Borders has officially called it quits.

Pres. Obama marks the end of government ownership of Chrysler

Steve Carmody — Fri, 03 Jun 2011 18:17:15 +0000

President Obama congratulated a crowd of Chrysler auto workers today in Toledo for their hard work as he stood surrounded by an assembly line of Jeeps. He stressed the importance of the 2008 bailout of Chrysler and G-M to the rest of the auto industry, including Ford:

Borders prepares for important bankruptcy court date this week

Steve Carmody — Mon, 30 May 2011 19:59:01 +0000

Attorneys for Borders will be back in court this week asking a judge to give the troubled Ann Arbor-based book store chain more time to exit bankruptcy protection. When Borders filed for bankruptcy protection in February, the hope was the bookstore chain would be able to quickly turn itself around. That apparently isn’t happening.

Borders Books liquidation sales coming to a close

Steve Carmody — Tue, 19 Apr 2011 05:01:01 +0000

The company handling the liquidation sales at more than 200 Borders bookstores says most of those stores will close by this weekend. The liquidation sales have already been completed at many of the stores, including one in Ann Arbor.

Rick Kaye is a spokesman for Hilco Merchant Services, the company handling the liquidation sales.

Report: Borders to leave Ann Arbor for Metro Detroit

Zoe Clark — Wed, 06 Apr 2011 12:38:28 +0000

The Wall Street Journal is reporting that Borders Group Inc. will move its headquarters from Ann Arbor to the Detroit metro area. The company is currently operating under Chapter 11 bankruptcy. From the Journal:

Borders Group Inc. plans to tell publishers and landlords Wednesday it has achieved major cost savings, including more than $30 million in rent reductions, and that it will move out of its Ann Arbor, Mich., headquarters for cheaper office space in the greater Detroit metro area.
Presenting its business plan to an unsecured creditors committee, predominantly made up of publishers and landlords, Borders also plans to say it has now closed about 50 superstores as part of efforts to emerge from Chapter 11 bankruptcy, according to people familiar with the matter. Altogether, Borders will close 226 by the end of next month, although a handful of additional stores could be closed, depending on negotiations with landlords, the people said.

News organizations around the state were quick to pick up the report:

The Detroit Free Press: Report: Borders HQ to leave Ann Arbor
The Detroit News: Report: Borders eyes HQ move to Metro Detroit
The Ann Arbor Chronicle: A2 Business
AnnArbor.com: Wall Street Journal: Borders plans to move headquarters out of Ann Arbor

Borders will get more time to review bookstore leases

Steve Carmody — Tue, 15 Mar 2011 20:45:22 +0000

A federal bankruptcy judge has decided to give Borders Group another 90 days to review leases for its bookstores. The Ann Arbor-based bookstore change is working to emerge from bankruptcy later this year. Borders is already closing 200 bookstores across the country, including 4 stores in Michigan. Borders is expected to announce plans to close additional stores and renegotiate leases on about 600 other outlets.

GM expected to announce $5 billion profit for 2010

Steve Carmody — Wed, 23 Feb 2011 19:14:27 +0000

General Motors is expected to formally announce its first ‘full-year profit’ since 2004 on Thursday. It was just two years ago General Motors had to seek bankruptcy protection. Now, the automaker is expected to announce a 5 billion dollar profit for 2010.

Aaron Bragman is an automotive analyst with IHS Global Insight. He gives a big part of the credit to the federal government for helping GM through bankruptcy.

“I don’t think we’d be in the place where we’re at right now if the government had not intervened and actually funded their bankruptcy. We’d be in a very different place.”

Bragman says 2011 might be another good year for GM, because of rising gasoline prices.

“Chevy is bringing several small vehicles to market. The new Spark is on the horizon. The new (Sonic) is coming this year. So we’re actually seeing a lot of these small cars coming…and now we’re seeing a market force that may actually drive people to go an buy them.”

Bragman says high gasoline prices may hurt Chrysler, because it doesn’t have as many high- mileage vehicles to offer car buyers.

Borders files for bankruptcy

Vincent Duffy, Mark Brush, Jennifer Guerra and Steve Carmody — Wed, 16 Feb 2011 21:40:22 +0000

Update 4:37 p.m.

Independent bookstores are waiting to see what kind of impact Borders’ bankruptcy will have on business. Michigan Radio's Jennifer Guerra spoke with Nicola Rooney, owner Nicola’s Books in Ann Arbor.

Rooney expects business to pick up at her store now that one of the Borders in Ann Arbor is slated to close. She said Borders’ financial problems are not emblematic of the book business in general:

"No, it’s not the death knell of bookstores by any means. They did a lot of things wrong over the years…and at any time there were things they could have done differently that they did not, and this of course from someone who knows maybe two percent of what was really going on inside, because you never know the real story," said Rooney.

Rooney blames Borders's problems on its poor website strategy, and frequent management changes.

Update 12:07 p.m.

Michigan Radio's Jennifer Guerra reports that of the stores slated for closing so far, four are in Michigan:

Dearborn
Utica
Grosse Pointe
Ann Arbor - the Arborland location.

Guerra spoke with Ann Arbor resident Jack Love about the bankruptcy:

"I’m sad. They’re nice places to go, pick up a book, look through it, of course Borders has more than just books: coffee, book readings, public gatherings," said Love.

Guerra says Love partly blames himself for Borders’ financial problems - he’s a book fiend who buys most of his books online at Amazon.

Update 11:58 a.m.

The Wall Street Journal's Law Blog has posted a list of the top Borders creditors - Who's Owed What in Borders' Bankruptcy.

Not surprisingly, book publishers top the list. Penguin Putnam Inc. is at the very top. They're owed $41,118,914.

Update 11:33 a.m.

Michigan Radio's Steve Carmody just spoke with Rob James, the president of EXP Realty Advisors. EXP specializes in real estate valuations for companies in bankruptcy. James told Carmody that "no doubt about it" the Borders store closings will have a ripple effect in the retail industry:

"It's going to put a lot of strain on the shopping center industry and its going to hurt a lot of landlords," said James.

Update 11:07

Here is the list of stores Borders plans to close

Update 11:00 a.m.:

The company has released a list of stores it plans to close. We'll have that list posted shortly.

The Wall Street Journal reports the company has secured a loan that will keep the company going while it goes through bankruptcy reorganization. From the WSJ:

The Ann Arbor, Mich., company also said it has lined up a $505 million loan from GE Capital to fund its operations while in bankruptcy. Access to such a loan is subject to court approval.

In its bankruptcy petition, Borders listed assets of $1.28 billion and liabilities of $1.29 billion as of Dec. 25.

Borders' five largest unsecured creditors are the book publishers Penguin Putnam Inc., Hachette Book Group, Simon & Schuster Inc., Random House and Harper Collins Publishers.

AnnArbor.com has some extensive coverage of the bookseller's bankruptcy filing, including a live blog. Nathan Bomey of AnnArbor.com reports on some of the scenarios that could unfold during the bankruptcy reorganization. They also highlight some of the missteps in Borders history. From AnnArbor.com:

Among the company's biggest mistakes was allowing Amazon to manage its online sales from 2001 to 2008.

“They never really harnessed the power of the Internet,” said David Dykhouse, a manager of Borders’ Arborland store from 2002 to 2007. “As someone once said, the Internet is the comet that killed the dinosaur. I’m afraid Borders is one of those dinosaurs.”

8:09 a.m.

Borders Group is filing for Chapter 11 bankruptcy reorganization after a long struggle to stay afloat. Borders had a difficult time keeping up as the book and music businesses changed beneath its feet.

The 40-year-old Ann Arbor company plans to close about 30 percent of its stores, or about 200, over the next few weeks. The company will receive $505 million dollars in so-called debtor-in-possession financing from GE Capital and others to help it reorganize.

Borders has recently delayed payments to its vendors, landlords and other creditors. Big-box bookstores have struggled as more people buy books online, in electronic form or at grocery stores or discounters such as Walmart.

The 2 types of bankruptcy facing Borders

Mark Brush — Tue, 15 Feb 2011 16:23:06 +0000

With the impending bankruptcy of Borders Group Inc., we thought we'd give you a quick explanation of the two types of options facing the company.

Chapter 7 Bankruptcy

Also known as "liquidation" or "straight bankruptcy." It sparks an 'everything must go' sale of the company's assets. The company may cease operations after filing Chapter 7 bankruptcy.

The company that owes the money files for Chapter 7 bankruptcy in court. The company's assets are turned over to a bankruptcy trustee who then sells the assets and tries to pay back the company's creditors. In exchange, the company that owes the money is freed from having to pay all of its bills in full (unless some wrongdoing is found).

The details of Chapter 7 rules vary from state to state.

Chapter 11 Bankruptcy

Also known as "reorganization" bankruptcy used by many corporations (like K-Mart and General Motors).

After filing for Chapter 11 bankruptcy, the company that owes money typically keeps running its business and keeps its assets while going through a reorganization process overseen by the court.

A reorganization plan is put forth, and if the majority of creditors accept it, and the court accepts the plan - the company continues operating and repays its creditors under the reorganization plan.

Payment to creditors can come from the sale of assets, repayment from future profits, or from mergers or recapitalization.

GM CEO says automaker has been humbled

Zoe Clark — Fri, 10 Dec 2010 14:13:27 +0000

Dan Akerson, General Motors' CEO, told the Economic Club of Washington D.C. this morning that his company was humbled by its "near-death experience" during its 2009 bankruptcy.

Hamtramck ratchets up bankruptcy debate

Sarah Hulett — Fri, 19 Nov 2010 18:00:36 +0000

The city of Hamtramck is ratcheting up the pressure on the state to allow it to file for bankruptcy.

Hamtramck’s city attorney has sent a letter to Governor Granholm urging her to issue an executive order allowing the city to seek federal bankruptcy protection. The letter also says appointing an emergency financial manager would not give the city the tools it needs to correct its financial problems.

Hamtramck asks state to file for bankruptcy

Sarah Hulett — Thu, 18 Nov 2010 02:42:16 +0000

The city of Hamtramck says it will run out of money at the end of January, and officials have taken the unprecedented step of asking the state for permission to file for bankruptcy.

Bill Cooper is the city manager of Hamtramck.