WTNH on YouTube: On Thursday, Borders will ask a judge to begin liquidation of the company.Reuters has even more details.
Borders Group Inc, the second-largest U.S. bookstore chain, said it has canceled an upcoming bankruptcy auction and will close its doors for good.As someone who lived in Ann Arbor from 1989 to 1999 and hung out in Ann Arbor regularly until earlier this year, spending much of that time in the Ann Arbor flagship store, I find this very sad for me personally, as you can see by my previous two posts on the subject at my LiveJournal.
The company said in a statement Monday it was unable to find a buyer willing to keep it in operation and will sell itself to a group of liquidators led by Hilco Merchant Resources.
Borders' roughly 400 remaining stores will close, and nearly 11,000 jobs will be lost, according to the company.
"We are saddened by this development," Borders President Mike Edwards said in the statement. "We were all working hard toward a different outcome, but the headwinds we have been facing for quite some time ... have brought us to where we are now."
As someone who blogs about sustainability, including sustainable business and a just society, I find it distressing, if for no other reason that it was a Michigan company. I don't like seeing any of those go under.
The worst part of this? I'll let Schuyler Carroll, a bankruptcy attorney at Perkins Coie LLP, explain.
Carroll said the most significant loss associated with Borders' closing is that of jobs.Neither 11,000 lost jobs nor 400 empty large buildings will be good for the economies of the places where Borders currently still has stores. Just the scramble to fill the retail spaces will be ugly, as Royal Oak is finding out as the city is trying to replace a vacant auto dealership with a supermarket--and that is an example where there is a replacement. What happens if there isn't one?
"It's one more knife in an economy that really doesn't need that," he said. "And for people who may be living on the edge right now and may not be able to quickly find a new job, they may not do very well."
Finally, this is not good news for
For all its innovations on the digital side, Borders' main retail competitor, Barnes & Noble, remains in its own difficult straits, Carroll said.The news didn't even help Amazon.com, as the company's stock dropped more than $4.00 today before finally recovering enough to close down $-1.34 (-0.63%).
The company put itself up for sale in August amid years of declining print book sales, saying its shares were undervalued. It is examining a $1 billion takeover offer made in May by John Malone's Liberty Media Corp.
David Strasser, an analyst at Janney Capital Markets, said liquidating Borders could make Barnes & Noble more valuable.
"This is perhaps an opportunity for a higher negotiated bid via Liberty or an entrance of another bidder," Strasser said last week in a note to clients.
But Carroll isn't so sure.
"Barnes & Noble is having its own problems," Carroll said. "I don't think one less store down the street is going to solve them."
About the only silver lining is that some of Borders' stores might be picked up by Barnes and Noble.
Barnes & Noble was thought to be interested in buying a handful of Borders stores after Glenn said at a hearing last week that the company had voiced some interest in select Borders locations.Sigh. I think my wife and I will go to the Birmingham Borders on Friday for a going out of business sale.
Barnes & Noble CEO William Lynch said in February that certain Borders stores appeared attractive to the company, which operates more than 700 stores.
Borders' statement did not address whether Barnes & Noble had made an offer, and a Barnes & Noble spokeswoman declined to comment.
R.I.P. Borders, although I don't think that P will stand for peace, but instead for pieces.