Earlier this year, Borders Group Inc, announced that the company was filing for bankruptcy protection. The second-largest U.S. bookstore chain commented that the company would focus on reorganizing debts and assets by closing about 30 percent of its stores nationwide. In the original filing, Borders announced that 16 Florida stores would be closing.
However, Borders announced Monday that instead of reorganizing its debt under the bankruptcy filing, the company will now begin the liquidation process. All stores in Florida and across the nation will begin closing the doors for good beginning July 22. The company currently employs over 10,000 individuals.
Borders has been seeking a buyer for the past five months in order to keep its stores running. Najafi, a private equity firm, did offer a bid to buy out the company for $215 million in cash while also assuming $220 million of the company’s debt and $15 million for unsecured creditors. However, creditors rejected the offer.
As a result, the company has agreed to a liquidation plan, which will be handled by Hilco Merchant Resources and Gordon Brothers Retail Partners. The president of Borders Group commented that the company made every effort to avoid closing its stores and was “saddened” by the news. “The rapidly changing book industry, e-reader revolution and the turbulent economy have brought us to where we are now,” he said.
Similar to the Borders Chapter 11 filing, individuals can also choose to reorganize debt under Chapter 13 bankruptcy. When individuals restructure their debts under Chapter 13 in Florida, they are able to analyze their financial situations and develop a plan to better manage their assets and debts. However, when an individual restructures or reorganizes debt, creditors and debtors must both agree to the bankruptcy plan.
Hesitating for too long about whether or not to file bankruptcy may affect an individual’s bankruptcy plan. Some believe that Borders should have filed bankruptcy sooner in order to save the company from liquidation. However, debt continued to accrue, which made it difficult for the company to reach an agreement with its creditors.
Sun Sentinel: “Borders to liquidate after sale efforts collapse,” Greta Guest, 18 July 2011