Borders Group Inc. files for bankruptcy

Borders Group Inc. files for bankruptcy

2011-02-17 08:01:29 GMT+7 (ICT)

ANN ARBOR, MICHIGAN (BNO NEWS) -- Borders Group Inc. on Wednesday announced that it has filed a petition for reorganization relief under Chapter 11 of the Bankruptcy Code.

Borders Group President Mike Edwards confirmed the news, explaining that operating under Chapter 11, Borders would be receiving commitments for $505 million in Debtor-in-Possession (DIP) financing led by GE Capital, Restructuring Finance.

In addition, Borders said approximately 30 percent of the company's national store network is currently 'underperforming' and are expected to close in the next several weeks, but the rest of its bookstores and online store would continue to operate normally.

According to its bankruptcy filing, the company is currently in a $1.29 billion debt, listing $1.27 in assets, as it owes millions of dollars to publishers across the nation.

"It has become increasingly clear that in light of the environment of curtailed customer spending, our ongoing discussions with publishers and other vendor related parties, and the company's lack of liquidity, Borders Group does not have the capital resources it needs to be a viable competitor and which are essential for it to move forward with its business strategy to reposition itself successfully for the long term," said Edwards.

"This decisive action will give Borders the opportunity to achieve a proper infusion of capital in order to have the opportunity to have the time to reorganize in order to reposition itself to be a successful business for the long term," Edwards added.

The company said that it is serving customers in the normal course, including honoring its Borders Rewards program, gift cards and other customer programs. Additionally, the company expects to make employee payroll and continue its benefits programs for its employees.

The Chapter 11 petition for relief was filed in the U.S. Bankruptcy Court, Southern District of New York, but the completion of the company's DIP financing arrangements is subject to approval of the Bankruptcy Court and the satisfaction of certain conditions provided in the financing commitments received by the company from the lenders providing such financing.

-- © BNO News All rights reserved 2011-02-17