Wednesday, February 16, 2011
Borders Files for Bankruptcy; Owes Top Publishers $230 Million, and Will Close About 200 Stores
Borders formally filed for Chapter 11 bankruptcy protection in a Manhattan Federal Court, listing total debt of $1.29 billion and supposed assets of $1.275 billion. Among the top 30 unsecured creditors listed in the filing, book publishers and distributors are owed roughly $230 million (see below for the full list).
The bookseller says in an announcement that it "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." For customers, they expect to honor the Borders Rewards program, gift cards and other customer programs and they expect "to make employee payroll and continue its benefits programs for its employees."
The company says they had 642 stores open as of January 29. In their press release, they say they expect to close "approximately 30 percent" of those stores, or roughly 200 locations, "in the next several weeks."
Ken Hiltz has been named senior vice president – restructuring of the company. Named advisory firms include Jefferies & Company for financial and restructuring services; DJM Property Management for lease and real estate advisory services; and consultants AP Services for interim management and restructuring services. The company intends to "finalize and implement a store closure, store liquidation and lease modification plan" as already discussed and approved by their board.
President Mike Edwards addresses the obvious in the release, "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 and which are essential for it to move forward with its business strategy to reposition itself successfully for the long term." Elsewhere, the announcement perpetuates the company’s illusion that they are but one more step away from a turnaround into "a stronger and more vibrant book seller."
The publisher creditor list comprises:
Penguin $41.1 million
Hachette Book Group $36.9 million
Simon & Schuster $33.75 million
Random House $33.5 million
HarperCollins $25.8 million
Macmillan $11.4 million
Wiley $11.2 million
Perseus $7.8 million
F+W Media $4.6 million
Houghton Mifflin Harcourt $4.4 million
Workman $4 million
McGraw-Hill $3.1 million
Pearson Education $2.8 million
NBN $2 million
Norton $2 million
Zondervan $1.9 million
Hay House $1.7 million
Elsevier Science $1.6 million
Publications Intl. $1.1 million
Readers will recall that we recently tried to frame the coming Borders bankruptcy in the context of the AMS bankruptcy from late 2006. In that filing, the 40 largest publisher creditors were owed $220 million, topped by Random House, which was owed $43.3 million.
So, anyone have informed opinions or links to places where people in the know are doing more than just panic ranting? I know what my assumptions are about how this would affect writers, but I also know that there is a wide chasm between what seems like common sense to me, and the business/marketing decisions of large corporations.
$230 million. It’s just… crazy. Isn’t it all just virtual numbers being pushed around a screen at that point.
Alyc Helms 
Can I get you on my clothes just to find out?
I like tea. I’m not much of a tea snoot… I just know what I like, and sometimes, it really is the cheapest powder-y-est Chinese green in the store, but I think it’s good. I wish habing tes at 4:00 was still something people did, though. It would make a nice cap to a lousy work day… and think of the little sandwiches! Mmm…
yes, everything comes back to food… 🙂
mE
gollumzen of the day: if you don’t like tea, make sure your assailant has a very big stick.
Mmmmm…. Tea. I love tea. I’d like to think I understand tea. Although I doubt it’s the same understanding of tea that you posess.
Mmmm…. tea. I hopefully will have tea this eve.
tea continued
I understand tea… but you knew that
Tea in texture, taste, and smell
Loved your post..it got me thinking about all the tea I love and how even my new perfume smells like Earl Grey (its Bergamot by the Body Shop), and after having worn this perfume everyday for a week I had go out and buy a box of Earl Grey because I did not have any in the house. And then I thought about the day after your graduation when I was still a very novice tea drinker and I put lemon and cream in my tea. But now I know better, and I buy good cream and flavored syrups or sometimes flavored creamers and put in sugar and mix and drink and enjoy. I think about Tea in Guatemala, and in Mexico where I had to bring my own boxes, having planned on being there for a month, only to have my host mom make me the best pure cinnamon tea in the world.
Off I go now to write about Guatemala, where they grew coffee because the climate is not right for tea, and where coffee drove people off their lands and into the fields to pick hundred pound bags for less than 3$ a day….how much do the people who pick tea in India make, I wonder what a history of Tea growing countries would show, would it be just as sad and devastating as the coffee producing countries like Guatemala, Brazil, and Columbia. Can we divide the world not by language but by which beverage they produce and whom the produce it for, Coffee by Latin America and Africa for the United States, Tea by India, China, and Where else? for England, the US, and ? my thoughts drift and I babble…off to drink Te de Canela (cinnamon tea)
count me in. I’ll actually be here!
Woot! Done. I already picked up my ticket but since we’re doing lunch, we can run by the box office and exchange for seats together ;>
heh…I guess you are my official G&S buddy!
*sigh* you’re always doing these cool things that I want to do to, but can’t for various reasonss. This time it is the standard “out of money, must eat ramen for weeks” excuse.
I’ve always wanted to see The Mikado and it’s so rarely preformed.
Mark your calendar, then. The friend I’m going to go see in The Mikado (she’s Peep Bo) just got cast as Musette in a professional production of La Boheme that will be running in Chicago next summer. I am most definitely going to go up to see her, so a Bohemian Road Trip ™ will probably be in the works ;>
I already saw it, but folk should go with you, it’s really good!! 🙂
It’s a good performance of it – we went last weekend. The chorus can be a little hard to understand, but the main characters’ voices are good.
I did the show as an undergrad, so I’m not too worried about not understanding the chorus since I not only know the words, I know the alto line. My friend Rachel was the Peep Bo, so I’m excited to see her. See previous reply to dillochan about her getting cast as Musette in a pro-show of La Boheme!
$230 million owed doesn’t necessarily mean that it’s money the publishers will never see. Frankly, out of over a billion in debt it’s a pretty small number. The big worry is that they’re unsecured (…how… are they unsecured creditors? BAFFLED). That’s what means they might never see it, because basically you pay off all your secured creditors first, various other groups who have better claims, and then the unsecured creditors duke it all out on a pro rata basis over what’s left. If anything’s left.
Businesses float big debts like that all the time, especially national chains. It’s like living in a universe with magic money and lots of zeroes on the ends of things.
Can’t say what it’ll do for writers, but basically the big publishing house/bookstore system isn’t good for writers (or readers, for the most part). Seeing things get shaken up is gonna be real interesting– but I doubt genre’s going anywhere, since genre writers are the ones having the best luck switching to e-pub formats or distributing their stuff in new ways (so it seems from this reader’s standpoint anyway, the availability of tech-savvy writers is mostly in the SF&F and queer genres, possibly since we’re used to having to hunt the good stuff down anyway).
Now excuse me, I need to get back to my commercial law homework. For real (on the section on tracing collateral value in bankruptcy XD)
This book as Hitchhiker’s jokes in it, and my business association book is written by dorks. Apparently commerce (academic law) is the realm of giant nerds. Who knew.