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Posted on Fri, Feb 11, 2011 : 2:37 p.m.

Borders 'in final stages' of planning for bankruptcy filing

By Nathan Bomey

Ann Arbor-based Borders Group Inc. may file for bankruptcy protection as early as Monday or Tuesday, according to a report this afternoon by the Wall Street Journal.

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Borders employs about 550 workers at its Ann Arbor headquarters.

WSJ, citing anonymous sources, said a Borders' Chapter 11 bankruptcy filing would likely include a plan to cut about 200 stores. The book store chain currently operates about 500 superstores, including three in Washtenaw County, and another 170 small-format stores.

The firm, facing a precipitous drop in sales over the last several years, is in discussions with Bank of America and GE Capital to secure debtor-in-possession financing, WSJ said. That would allow the company to stay open during bankruptcy proceedings.

Borders is "in the final stages" of planning for a filing, the publication reported.

“There have been constant inquiries by reporters, and stories written, regarding whether Borders is considering a Chapter 11 filing," spokeswoman Mary Davis told in an e-mailed statement also being provided to other media. "Borders is not prepared at this time to report on the course of action it will pursue.”

A bankruptcy filing would allow Borders to slash its store footprint by cutting leases before they were set to expire, a move analysts view as critical to the company's restructuring. Borders pays about $1 billion in annual lease obligations, more than 35 percent of its revenue.

But, due to inevitable uncertainties regarding the in-court restructuring process, a Chapter 11 bankruptcy reorganization filing eventually could be forcibly converted into a Chapter 7 liquidation filing if creditors refuse to agree on a restructuring plan.

Borders announced in early December that it would face a cash crunch in early 2011 if it could not obtain a new source of lending. Later that month, the firm started delaying payments to publishers in a bid to conserve cash.

On Jan. 27, Borders first acknowledged the possibility that it would have to file for bankruptcy.

Borders stock (NYSE: BGP) was trading at $0.28 at 2:37 p.m., down $0.09 on the day. A bankruptcy filing would likely wipe out the equity of Borders shareholders.

Borders, founded by brothers Tom and Louis Borders in Ann Arbor 40 years ago, employs about 550 workers at its Ann Arbor headquarters and another 106 at its three stores in the county. The firm has 19,000 employees overall.

Contact's Nathan Bomey at (734) 623-2587 or You can also follow him on Twitter or subscribe to's newsletters.



Mon, Feb 14, 2011 : 8:54 p.m.

I'd like to know why Borders sent out "buy a gift card for Valentines Day" emails out?? They invalid after filing for bankruptcy and that is wrong!


Sat, Feb 12, 2011 : 2:01 p.m.

Perhaps it would be a good idea if those in charge could pay close attention to comments posted on articles about them. Maybe Mary Davis should search for "Borders" on and read all the comments. She'll see a common theme from everyone. Poor customer service. As you try to re-invent Borders, put that as the #1 item to fix on your "To Do" list. #2? Treat your employees well again. They are the ones that the customers have to deal with. They are the face of your company.


Sat, Feb 12, 2011 : 1:56 p.m.

Okay, so they're going to file for bankruptcy. Unless they completely re-engineer their entire management structure and business plan they'll just fail again after this. If the foundation is no good, no matter how many times you rebuild the house it will still fall down. The fundamental way that Borders runs their business is all wrong. They can close nearly half of their stores. They can wipe out most of their debts. They can lay off more staff. That only treats the symptoms. The problem is that they hold onto a faulty business plan. They make poor business decisions. They are always late to the game and try to plot their own course when it's too late. Go ahead. File for bankruptcy. If you do more than just use it as an excuse to cut costs and actually make some real changes, then maybe I'll try being a customer again. Until then, good riddance. You treat your customers like trash, abuse your employees and wonder why you're failing.

Alan Goldsmith

Sat, Feb 12, 2011 : 11:49 a.m.

Thanks for the links to the journalist coverage of this story. Thank goodness the Detroit News and WSJ are on the case.


Sat, Feb 12, 2011 : 2:59 a.m.

I bought 20 used books online @ borders for $1 each..... free shipping! They showed up in separate packaging almost everyday (or felt like it) for about 4 weeks. I kept thinking.... what a great business! haha


Sat, Feb 12, 2011 : 12:49 a.m.

Wow. I did not see that coming.


Fri, Feb 11, 2011 : 11:01 p.m.

Another----One----Bites---The----Dust In business you either sell you products or service or both ORgo out of business.Borders couldn't cut it. Stop whining.They aren't the first.They certainly won't be the last.


Fri, Feb 11, 2011 : 10:32 p.m.

When Border's first opened on State Street (way back when), it was unique to me because customers were welcome to browse around and the sales assistants were all about positive customer service. Other book stores at that time did not appreciate lingering customers. Border's was a a beautiful and welcoming book store. It's sad to see it struggling now. I hope they can downsize, tech up, and survive. Ann Arbor still needs and supports this business (at least this long-time customer does).


Fri, Feb 11, 2011 : 10:09 p.m.

The tipping point is when Border's pushed the limits beyond what even their VP & Corporate Counsel could accept, such that he resigned--one of the last great hopes of Border's survival!! Too bad!!

Nathan Bomey

Fri, Feb 11, 2011 : 8:41 p.m.

@jwally Here's some information on that topic that might help you out: <a href="" rel='nofollow'></a>


Fri, Feb 11, 2011 : 8:36 p.m.

Does anyone know if they will continue to honor outstanding gift cards if they go Chapter11? They probably will not honor the cards if they go Chapter 7. I'm holding about $100.oo worth. Thanks.


Fri, Feb 11, 2011 : 11:09 p.m.

@Jojo B: jwally's question is perfectly fine. However, I found it contextually inappropriate. Kind of like if there was a story about a tornado ripping through a community and the first question was about if softball league was cancelled for the night. Fine question. But inappropriate given what people are going through. Carry on.

Jojo B

Fri, Feb 11, 2011 : 10:41 p.m.

@jhammer: While I see where you are coming from, I think your response is a little over the top and misdirected. I think jwally's question is perfectly fine. Borders is a local merchant and most of us are (or used to be) customers. It's perfectly valid to ask questions from a customer's point of view. Now if you want to direct your anger to a more proper location, why not blame the people at the helm of the ship who have been seemingly deliberately or blindly steering Borders towards the iceberg for the past several years? I have several friends who all ALREADY got laid off from Borders. They all knew it was coming and can talk about the poor corporate leadership and planning within the organization. THAT would make a good human interest piece. We are allowed to talk about Borders as consumers because we were the consumers that helped build Borders!


Fri, Feb 11, 2011 : 9:38 p.m.

Nice to know that during this time of anxiety for so many families and our community that you are concerned about your gift cards. If I were, I'd do a human interest piece on your suffering because of the Garfield calendar you may not be able to purchase. Have some respect for those that are reading this for fear of losing their livelihoods, OK?

Jojo B

Fri, Feb 11, 2011 : 8:42 p.m.

Go shopping NOW!!! :) It's time to cash out!