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Posted on Wed, Jul 13, 2011 : 11:06 p.m.

Tentative sale of Borders is in jeopardy, raising prospect of liquidation

By Nathan Bomey

The company that had tentatively agreed to acquire Ann Arbor-based Borders Group Inc. said tonight that it's no longer interested in buying the bookstore chain unless it can proceed under the terms it previously laid out.

The announcement places into doubt the future of the proposed sale of Borders and increases the possibility that the company will be forced to liquidate.

Thumbnail image for Borders_headquarters_Ann_Arbor_Phoenix_Drive.JPG

The proposed sale of Borders, which employs 400 workers at its Ann Arbor headquarters, is in jeopardy.

Phoenix-based private equity firm Najafi Companies, which had been named as the leading bidder for Borders, said in a statement that "the deciding parties’ legal team and financial advisors have elected another option which is in contrast to what we had envisioned for the future of Borders."

Meanwhile, the Wall Street Journal reported that the deal with Najafi "unraveled."

Najafi said in the statement that "we remain willing, ready and able to move forward should the deciding parties instead choose to work with us and our existing offer."

The troubles with Najafi are believed to be related to objections by some landlords and an objection filed today by a committee of Borders' unsecured creditors, major publishers who argued that Najafi's proposed acquisition would not prevent the company from liquidating Borders' assets and keeping valuable intellectual property for itself.

Najafi, whose Direct Brands owns the Book of the Month Club and other assets, had agreed to a tentative deal to acquire Borders by paying $215.1 million in cash and assuming about $220 million of liabilities.

Borders is set to go before a judge in New York on Thursday to ask for approval of its sale procedures tied to an auction that is scheduled for Tuesday. Najafi was previously named as the "stalking-horse bidder" in that auction — meaning the leading prospective acquirer.

Competing bids are due by Sunday. Borders, as required by its bankruptcy financier, has already lined up a backup bid by a team of liquidators, which would sell off all of Borders' remaining assets if the company fails to find a better offer.

If Borders is to be liquidated, the publishers want the process to be handled by liquidation firms that have already been identified by Borders.

WSJ described Borders as being "on the brink of liquidation."

In its statement tonight, Najafi contended that it had a defined strategy to keep Borders alive.

"From day one, our intention had been to keep Borders intact and to provide the best long-term outcome for Borders’ loyal customers, publishers, employees and the entire book industry," the company said.

A spokeswoman for Borders declined to comment tonight on Najafi's statements.

A liquidation of Borders would affect the company's 11,000 employees, including nearly 400 at the headquarters in Ann Arbor. It would also mean the expeditious closure of its 399 remaining stores, including the flagship store in downtown Ann Arbor.

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



Thu, Jul 14, 2011 : 8:44 p.m.

Typical bankers and corporate beancounters; too shortsighted and consumed with greed to see what's in their own best interests. Obviously, if the sale falls through, landlords won't get squat, publishers will lose a major outlet for their wares, and any "intellectual property" will be worthless. Worst case, if the deal goes through and the chain is liquidated a couple years down the road instead of now, landlords continue to collect rent and publishers continue selling books until (hopefully) the economy improves. Must be the same bankers that have to be paid and nagged by the government to try to save mortgages and, worst case, continue collecting payments for a couple more years instead of foreclosing now and trying to unload homes in a depressed market.

Karen Hart

Thu, Jul 14, 2011 : 12:28 p.m.

This is all so sad. Borders has been my favorite book store since grad school, and I've lived many different places since then. Having such a great and accessible place downtown (aside from all the other Borders locations) is so vital to downtown health & vitality -- I can't imagine what could take its place so effectively. It's one of the few places where students & townies mingle consistently. Without it, I fear for the complete "studentification" of the State & Liberty area, which is possible, given the huge new student housing complexes going in there.


Thu, Jul 14, 2011 : 12:23 p.m.

Snapshot - the problem is that GM was and is a significant exporter. They were also on a "too big to fail" scale, that would have decimated the suppliers as well as the communities with plants. Borders is more like Circuit City. It's a big retailer, but only a retailer. Besides, GM had a viable strategy for going forward. Borders is pretty much in the same position post-bankruptcy that it was pre-bankruptcy. Large brick-and-mortar stores, that all have to charge sales tax, without a good way to do tax-free internet transactions. And that is how we get monopolies. A company either finds some loophole and uses it to undercut the competition, or it goes the ATT route and buys the competition, or the Microsoft 'give away their product' route. Amazon has successfully gotten away with exploiting the "cheat on your taxes" loophole for sales/use tax. We'll see how long Barnes and Noble lasts.


Thu, Jul 14, 2011 : 11 a.m.

It is unlikely anyone will come up with an offer to top Gordon/Hilco, who will take 8 wks or so to maximize THEIR profits by having "sale prices" that are higher than Amazon, until all the good stuff is gone. Come October, Borders will be gone and 399 more big box stores will stand empty. Watch for some landlords to follow.


Thu, Jul 14, 2011 : 6:53 a.m.

There is nothing Borders has now, that anyone actually wants, that can't be had for less if they liquidate. So they all bide their time, and wait for the inevitable.


Thu, Jul 14, 2011 : 5:44 a.m.

Attn: We have a new nonprofit in Ann Arbor! " books without boarders"


Thu, Jul 14, 2011 : 3:47 a.m.

How come I don't hear any unions talking about "protecting" jobs, or "destroying the middle class" we bailed out GM didn't we, the UAW should be shouting from the rooftops to save these jobs. Why aren't they? They got a sweet deal why shouldn't Borders employees? Let's hear from the UAW or any of you union leaders. Speak up for these folks. They are middle class, taxpaying, law abiding, members of YOUR community.


Thu, Jul 14, 2011 : 6:49 a.m.

Actually, Borders employees were represented by a union, albeit a rather weak one, for a few years earlier in the decade. However, given the weak economy, and the overall weakness in the bricks and mortar book business, they were not able to achieve any substantive increases in pay, benefits, or working conditions, and eventually were decertified by the same employees who voted them in. A rising tide lifts all boats, and an ebb tide scatters them in the sea.


Thu, Jul 14, 2011 : 4:33 a.m.

Only the unions taxpayers have paid for which is the UAW and all public sector unions. Remember, Borders won't be paying taxes, nor their employees which are supporting you union guys. You should contributing your union dues to keeping Borders in business. They contributed their tax dollars to keep you in business.


Thu, Jul 14, 2011 : 4:04 a.m.

Well I guess if the borders employees would join a union they could have been better protected and would get more support. I guess you expect the union to protect those who want the benefits without the struggle

Nathan Bomey

Thu, Jul 14, 2011 : 3:41 a.m.

More coverage tonight: The New York Times: <a href="" rel='nofollow'></a> The Wall Street Journal: <a href="" rel='nofollow'></a>