Borders Group Files for Reorganization Relief Under Chapter 11
ANN ARBOR, MI—Feb. 16, 2011—“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 Mike Edwards, Borders Group President.
“To position Borders to remedy this condition, Borders Group, with the authorization of its board of directors, has filed a petition for reorganization relief under Chapter 11 of the Bankruptcy Code. 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 said.
The company noted that, 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 percent 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, so its extensive network of remaining stores—as well as Borders.com—will continue to operate in normal course.
“Operating under Chapter 11, Borders has received commitments for $505 million in Debtor-in-Possession (DIP) financing led by GE Capital, Restructuring Finance. This financing should enable Borders to meet its obligations going forward so that our stores continue to be competitive for customers in terms of goods, services and the shopping experience. It also affords Borders the opportunity to move forward in implementing the appropriate business strategy designed to reposition Borders to be a potentially vibrant, national retailer of books and other products,” Edwards emphasized.