Ann Arbor, MI—Borders Group has filed a petition for reorganization relief under Chapter 11 of the Bankruptcy Code.
Ann Arbor, MI—Borders Group, with the authorization of its board of directors, has filed a petition for reorganization relief under Chapter 11 of the Bankruptcy Code, and plans to continue to conduct business as usual in the interim. This action is designed to give Borders the opportunity to achieve a proper infusion of capital — the company has secured a commitment for $505 million in debtor-in-possession financing, led by GE Capital — in order to provide Borders with the best route to reorganize and reposition itself for success in the long term.
The company says 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.
Among other initiatives and subject to court approval, Borders plans to undertake a strategic Store Reduction Program to facilitate reorganization and its repositioning. Borders has identified certain underperforming stores — equivalent to approximately 30% of the company’s national store network — that are expected to close in the next several weeks.
At the same time, the company noted that a major strength of Borders is its national presence, and its extensive network of remaining stores as well as Borders.com, will continue to run in normal course. The company emphasized that the closings were a reflection of economic conditions, cost structures and viability of locations, among other factors, and not on the dedication and productivity of the workforce in these stores.
“We are confident that, with the protection afforded under Chapter 11 and with the support of employees, publishers, suppliers and creditors, and the reading public, a successful reorganization can be achieved enabling Borders to emerge from the process as a stronger and more vibrant book seller,” says Mike Edwards, president of Borders Group.
The Chapter 11 petition for relief was filed in the U.S. Bankruptcy Court, Southern District of New York. Additional information about the reorganization is available at www.bordersreorganization.com or by telephone at (877) 906-7675.
Headquartered in Ann Arbor, Mich., Borders Group, Inc. is a leading specialty retailer of books as well as other educational and entertainment items. Online shopping is offered through borders.com.