As expected, the bankrupt Borders Group will be liquidated after it failed to find a last-minute suitor to save the 40-year-old bookseller, The Wall Street Journal reports.
The company announced this afternoon that it will ask a federal judge on Thursday to approve the previously announced sale to liquidators led by Hilco Merchant Resources and Gordon Brothers Group. Liquidation of Borders' 399 remaining stores could begin by Friday, leading to the loss of about 10,700 jobs. What was the second-largest book chain in the United States will no longer exist by the end of September.
"Following the best efforts of all parties, we are saddened by this development," Borders Group President Mike Edwards said in a statement. "We were all working hard towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, eReader revolution, and turbulent economy, have brought us to where we are now."
Liquidation comes five months after Borders filed for Chapter 11 bankruptcy protection following unsuccessful attempts by the foundering chain to convince publishers and distributors to convert late payments into loans as part of an improbable reorganization plan. Late payments led some distributors, including Diamond Book Distributors, to stop shipping to the company. As Borders closed stores it continued to hemorrhage money -- $132 million in April alone -- and executives -- 47 in the two months following the bankruptcy filing -- while industry watchers started the death clock.
Early this month Najafi Cos., a private-equity firm that owns the Book of the Month Club, emerged as a potential buyer, submitting a proposal that included $215.1 million for nearly all of the bookseller's assets, and the assumption of about $220 million in liabilities. However, creditors objected to the plan last week, setting Borders on a course for liquidation. Edwards held out hope for a last-minute suitor by Sunday's bidding deadline -- there were reports this morning of interest from Books-A-Million -- but none materialized.