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Wed February 16, 2011
Borders files for bankruptcy
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:
- 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 11:00 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.”
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.