U.S. Bookstore Chain Borders Files for Bankruptcy (Update 2)
posted on by Gia Manry
The American bookstore chain Borders announced on Wednesday that it has filed for Chapter 11 bankruptcy, as previously predicted by the Wall Street Journal newspaper. The Chapter 11 filing allows Borders to remain in business while reorganizing to pay off its debts.
As part of the program, Borders will close about 30%, or about 200, of its stores, and the company has also negotiated US$505 million in financing from GE Capital. Stores which remain open will continue to function normally, including "honoring its Borders Rewards program, gift cards, and other customer programs." Borders will also meet its payroll needs and continue providing benefits to its employees. The Borders.com retail website will remain open for business.
The company has launched a website for the reorganization, which offers its filing documents, press releases, and information for vendors and shareholders.
The bankruptcy comes after a string of difficulties for Borders, including the departure of two of its executives and delay of payments to publishers, followed by additional layoffs and an attempt to convince publishers to treat its debts as loans, which failed. As noted by the retail news source ICv2, Borders played a crucial role in the rise of manga sales in the United States in the first half of the last decade.
Source: Publishers Weekly
Update 2: In additional court documents available via the document filing system, Borders states that it owes Yen Press parent Hachette Book Group USA US$36.9 million, Viz Media distributor Simon & Schuster US$33.8 million, Kodansha Comics distributor Random House US$33.5 million, and Diamond Comic Distributors US$3.9 million. [Via Huffington Post]
Update 3: The Washington Post newspaper's blog provides an interactive map of the stores that will be closing.
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