In a move that surprises nobody, Borders filed for Chapter 11 bankruptcy protection this morning. A site went up this morning, Bordersreorganization.com, where you can find all the latest documents. You can view the actual filing here. A look at that document reveals that none of Borders 30 largest unsecured creditors are landlords.
Borders has 642 stores across the country. Shutting 30 percent of those would result in about 200 closures.
AnnArbor.com has a live blog going providing continuous updates as new details emerge.
Key details from the company's release:
"In this regard, 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," Mr. Edwards emphasized.
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, 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.
The Chapter 11 petition for relief was filed in the U.S. Bankruptcy Court, Southern District of New York. 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.
Reuters reported some of the background on the DIP financing yesterday. In short, Borders has been in talks for a while with lenders about the size and scope of the loan. It had reached an agreement with GE Capital last month.
In a separate piece, Reuters ranked the largest retailer bankruptcies since 2000. With $1.28 billion in assets (and $1.29 billion in debt), this is the 11th largest retailer bankruptcy in that time period.
There are already tons of write-ups of the announcement in the mainstream business press. A list of some stories is below:
- Borders Files for Bankruptcy (New York Times Dealbook blog)
- Borders Files Bankruptcy After Years of Market Losses (Bloomberg)
- Borders Files for Chapter 11 Bankruptcy Protection (Wall Street Journal)
- Borders files for bankruptcy protection (CNNMoney.com)