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Wall Street Journal: Borders Plans to File Chapter 11

The Wall Street Journal newspaper reports that the Borders media store chain is preparing to file for Chapter 11 bankruptcy protection early next week. Filing for Chapter 11 will allow Borders to stay in business while it pays back a restructured form of its debts. According to the newspaper's sources who are "familiar with the matter," Borders will close about 200 of its 674 stores, and will have the option under its debt management plan of closing about 50 more.

Borders said in a statement that it is not ready to report on what it intends to do.

Earlier this month, Borders negotiated a new credit line; however, this credit was dependent on convincing publishers to treat the company's delayed payments as loans. According to The Wall Street Journal, publishers did not agree to the arrangement.