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Posted on Fri, May 27, 2011 : 10:58 a.m.

Borders 'likely' to sell its assets in lieu of traditional reorganization, creditors say

By Nathan Bomey

A committee representing Ann Arbor-based Borders Group Inc.'s top creditors filed a motion Thursday objecting to the bookstore chain's request to extend the period in which the company can exclusively propose a reorganization plan.

And the committee, which represents the top publishers affected by Borders' Chapter 11 bankruptcy filing, asserted that Borders is "likely" to sell its assets within the next 30 to 60 days instead of reorganizing under bankruptcy protection.


Borders employs fewer than 400 workers at its headquarters on Phoenix Drive in Ann Arbor.

Melanie Maxwell |

The creditors said they were "gravely concerned" that an extension would harm their financial interests because Borders has lost some $180 million since filing for bankruptcy Feb. 16.

Borders' top seven unsecured creditors, including publishers such as Simon & Schuster and Random House, are owed more than $193 million, according to bankruptcy documents.

Borders has said it's close to finishing a bankruptcy reorganization plan but that it must convince publishers to agree to concessions for the plan to achieve viability.

But the creditors said in the filing with the U.S. Bankruptcy Court's Southern District of New York that Borders would probably pursue a sale of certain assets through the bankruptcy code's 363 provision. That provision allows bankrupt companies to sell off or spin off its most valuable assets while the old, unwanted assets are liquidated inside bankruptcy. This was the provision that General Motors, for example, used during its bankruptcy in 2009.

According to multiple reports, several parties have expressed interested in buying parts of Borders but none have sought to buy the entire company, which employs fewer than 400 workers at its Ann Arbor headquarters.

Borders last week filed a motion requesting that the court grant a 120-day extension to its right to exclusively propose a reorganization plan. Under the proposal, Borders would have until Oct. 14 to propose a plan with the court.

The creditors on Thursday objected to that request, unless the court specifies that the extension does not preclude the creditors committee from proposing its own competing plan for Borders' reorganization.

Borders, in a statement released to, said it's "customary in the early stage of complex cases for debtors to seek extensions of exclusivity. Moreover, in this case it is necessary given the company’s significant progress to date, and the extensive ongoing efforts undertaken to solicit potential interest, which has been fully disclosed to the (creditors)."

The company argued that the court should allow Borders to "continue to lead the process to a successful resolution — whether that be through the emergence from restructuring of a strong Borders, or a sale of the business in a way that will maximize value."

Meanwhile, attorneys for Starbucks Corp.'s Seattle's Best Coffee LLC filed a motion Thursday objecting to Borders' request to terminate its cafe contract.

Seattle's Best said that its contract with Borders requires that, if the contract is terminated, the company must work to ensure that the Seattle's Best brand and hallmarks are removed from its cafes and products.

"As a practical matter, SBC does not want the brand it has worked hard to develop used to promote a different and likely inferior product offering," the company said in its filing.

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



Sat, May 28, 2011 : 2:51 a.m.

I wonder if this "reorganization plan" is sufficient to allow the payment of bonus money? I hope not. This sounds like liquidation. If the stockholder, creditors and employees have to bite it then so should the management geniuses who lead the way these last few years. Sheesh.


Fri, May 27, 2011 : 7:55 p.m.

Borders has made mistake after mistake, day after day, year after year. They were given a 2nd chance by hardworking employees who followed the ridiculous demands: hawking Borders Rewards Plus cards to every customer, upselling at every opportunity, "make" books (books that were required to be upsold to customers, no matter what they were purchasing), numerous store relays and movement of product and departments, just to name a few. Many of us stayed until the very end (my store closed in April), only to be completely ignored by the home office (and DM) the last 2 months, completely left on our own, and in the dark. (I shouldn't, but I will add that the absence of a severance package was particually "dirty.") The 3rd chance was the cash infusion they received after the first group of stores liquidated. Since then, they've made no progress in innovating or developing an actual business plan that can work. I can't blame investors, lenders, and publishers wanting to cut their losses. And why shouldn't they? There will still be book stores, both physical ones and on-line ones. Borders' business won't disappear; it will just move to other businesses.


Fri, May 27, 2011 : 5:31 p.m.

I find it completely hilarious and no less ironic that SBC is complaining about the potential of having to sell an inferior product when the chicken sandwich that is their admitted "best seller" is purchased from.....wait for it.....SAMS CLUB!!!!!! LOL!


Sat, May 28, 2011 : 2:47 a.m.

Interesting Wilma. What is your source for that intel?


Fri, May 27, 2011 : 4:42 p.m.

Just like Blockbuster, bad management led to bad decision making caused them to fall way behind on the times. Sadly, Borders time has come... and past.

Linda Peck

Fri, May 27, 2011 : 4:16 p.m.

I agree, get it over with quickly and salvage what is left of the capital.

say it plain

Fri, May 27, 2011 : 3:23 p.m.

Ah well, *that* is the fat lady singing, isn't it? Not from the overpriced cds Borders sells, but from the mp3 download link, no?! Sorry, Border's, you. so. screwed. up. the young hip consumers would write... I feel sad that the last great protector of old-school textways could be such duped, bad businesspeople, sigh. But then I guess the Borders Brothers sold out to regular old-school coporate greedy shortsighted mis-takes. As the David Spade SNL sketch ( I think you can see probably buy those episode by episode on iTunes, if you don't have them for free from some filesharing setup lol...and would *never* have to wait around for a coupon to buy the overpriced physical dvds Borders used to 'sell', or more accurately, 'display' in their high-rent stores!) with the nasty flight attendants has it: "Buh-bye now!"


Fri, May 27, 2011 : 7:21 p.m.