Borders Group Files for Chapter 11 Bankruptcy
The retailer of media and entertainment products plans to shut down 30% of its stores quickly.
NEW YORK – Another retail store chain selling DVDs, CDs, books and other media and entertainment product is in financial straits as Borders Group on Wednesday filed for Chapter 11 bankruptcy protection.
In recent years, the likes of Tower Records and the Virgin Megastore chain saw their store business end up in liquidation amid declines in physical sales due to growth of online alternatives. Late last year, video rental firm Blockbuster also went into Chapter 11 bankruptcy.
"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," president Mike Edwards said. “We have the ability, based on our brick and mortar presence nationally; the on-line capabilities we have in place; the loyalty of, and access to, our customers; and the products and services we offer to be an important and easy access destination of exploration and purchase for readers across the country.”
The company said it has identified about 30 percent of its stores as underperforming, and those are expected to close in the next several weeks.
The company currently has 639 U.S. stores under several brand names - Borders, Waldenbooks, Borders Express and Borders Outlet.
Borders, which listed its debt at $1.29 billion, will look to restructure while getting access to $505 million in so-called debtor-in-possession financing from lenders led by GE Capital.
Among its creditors are many book publishers, including CBS Corp.’s Simon & Schuster, which has a claim of $33.8 million against the company.