By Joseph Checkler and Eric Morath Of DOW JONES DAILY BANKRUPTCY REVIEW
Borders Group Inc. (BGP) filed for Chapter 11 protection Wednesday morning and announced that it would close about 30% of it stores nationwide in the coming weeks.
The struggling operator of the Borders and Waldenbooks chains sought protection from its creditors in the U.S. Bankruptcy Court in Manhattan a month after it warned it may have to restructure the company in Chapter 11.
"It has become increasingly clear that in light of the environment of curtailed customer spending ... and the company's lack of liquidity, Borders Group does not have the capital resources it needs to be a viable competitor," said Borders Group President Mike Edwards in a statement.
The Chapter 11 filing will allow Borders to access new capital and reorganize its operations, Edwards said.
The company is launching a strategic review of its locations with the aim of closing underperforming stores. Earlier this week, a count of Borders stores using its store locator found it had 644 stores in 48 states, Washington, D.C., and Puerto Rico. Mary Davis, a spokeswoman for Borders, didn't immediately return a call seeking comment.
The Ann Arbor, Mich., company also said it has lined up a $505 million loan from GE Capital to fund its operations while in bankruptcy. Access to such a loan is subject to court approval.
In its bankruptcy petition, Borders listed assets of $1.28 billion and liabilities of $1.29 billion as of Dec. 25, 2010.
Borders' five largest unsecured creditors are the book publishers Penguin Putnam Inc., Hachette Book Group, Simon & Schuster Inc., Random House and Harper Collins Publishers.
I love Murder by the Book. I've not been that way in a while, but anytime I go to Texas, I go there, and usually drop a couple hundred bucks.
I had the most wonderful experience as a writer there. 2008. David Thompson (who died last year) was so great, treating me and the other unknown author like we were Edgar winners, I swear. And that shop gets people to come see you. I'd never sold two dozen books in a strange town before. David had gotten orders for our books from people around the world.
I'm in Houston but haven't been to Murder by the Book. I always meant to go but always ended up just getting my books online. I'll check it out one of these days but I've grown accustomed to ebooks. I mostly shopped at Barnes and Noble and Borders until I got fed up with their lack of selection and high prices.