Five months after filing for bankruptcy protection, the U.S.’s second-largest bookseller Borders will be liquidating its assets, closing all its stores, and letting go of its employees after the company was unable to reach a buyout deal with Book-of-the-Month Club owner Nafaji Cos. Instead, Borders’ assets will be sold to a group of liquidators led by Hilco and Gordon Brothers.
“We are saddened by this development,” said Borders Group President Mike Edwards, in a statement. “We were all working hard towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, ereader revolution, and turbulent economy, have brought us to where we are now.”
Borders currently operates almost 400 stores and employes nearly 11,000 people. All of the company’s retail locations will be liquidated—with court approval, that process could start in some locations as soon as July 22—with all locations going into liquidation by the end of September.
Borders filed for Chapter 11 bankruptcy protection back in February; as part of the process, the company closed roughly 30 percent of its most-underperforming retail locations and has secured some $500 million in financing to see it through recovery. Borders had put itself up for auction, hoping to attract a white knight that would invest in the company and bring it out of bankruptcy. However, despite ongoing negotiations with Nafaji, the companies were unable to come to an agreement and the auction period ended with no one making any bids for the company. As such, Borders has little choice but to submit to the bankruptcy court an offer from Hilco and Gordon to purchase the store assets for liquidation.
Industry reports indicate the competitor Barnes & Noble might be interested in picking up selected Borders locations, and the U.S.’s third-largest book retailer—Books-A-Million apparently indicated it might be interested in a subset of Borders’ remaining retail locations. However, neither company will confirm Books-A-Million’s interest, and despite the apparent success of its Android-based Nook ereader ecosystem, Barnes & Noble has its own financial difficulties: it’s currently mulling a $1 billion offer from Liberty Media for 70 percent of the company.
Although several factors no doubt contributed to Borders’ collapse—and many were recently outlined by former Borders exec Mark Evans most industry watchers cite increasingly cut-throat competition with the likes of Barnes & Noble and Amazon.com, as well as apparently being caught flat-footed by the digital media revolution.
“Everyone at Borders has helped millions of people discover new books, music, and movies, and we all take pride in the role Borders has played in our customers’ lives,” Edwards noted in his statement.. “I extend a heartfelt thanks to all of our dedicated employees and our loyal customers.”