Ann Arbor, Mich. –
Borders Group has filed for Chapter 11 bankruptcy protection, citing “curtailed
customer spending” and a lack of liquidity.
The bookseller, under
pressure from larger rivals Barnes & Noble and Amazon.com, said it will
close 30 percent of its more than 650 stores within the next several weeks and
has secured $505 million in debtor-in-possession financing led by GE Capital to
continue operations.
The chain, which also
carries DVDs, Blu-ray Discs and e-readers by Sony, Kobo and Velocity Micro, had
liabilities and assets of $1.3 billion each as of Dec. 25, according to today’s
filing with the U.S. Bankruptcy Court in Manhattan.
“Borders Group does not
have the capital resources it needs to be a viable competitor,” president Mike
Edwards said in a statement.
The company said it is
serving customers “in the normal course,” including honoring its Borders
Rewards program, gift cards and other customer programs, and expects to make
employee payroll and continue its benefits programs for its employees.
The chain emphasized that
the store 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.”
“We are confident that,
with the protection afforded under Chapter 11 and with the support of
employees, publishers, suppliers and creditors, and the reading public, a
successful reorganization can be achieved enabling Borders to emerge from the
process as a stronger and more vibrant book seller,” Edwards said.
