Feb 12, 2011
Borders bookstores, like this Glendale, Calif., outlet, are facing a cloudy outlook as a bankruptcy filing is reported to be coming soon. / GARY FRIEDMAN/McClatchy-TribuneTwitterFacebookShare
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By GRETA GUEST
Detroit Free Press Business WriterFiled Under
Borders Group, which has delayed payments to vendors for two months, could file for bankruptcy protection early next week, the Wall Street Journal reported Friday on its Web site, citing unnamed sources.
The Ann Arbor-based bookseller has been in intensive restructuring mode in recent weeks and has made a series of moves to try to avoid a Chapter 11 filing. It's been in turnaround mode for five years as it buckled under competitive pressure from Amazon.com, Barnes & Noble and others.
The publication reports that Borders would close roughly 200 of its 647 stores and cut thousands of jobs. Borders shares closed at 25 cents on the New York Stock Exchange Friday.
"There have been constant inquiries by reporters, and stories written, regarding whether Borders is considering a Chapter 11 filing. Borders is not prepared at this time to report on the course of action it will pursue," the company said in a statement.
In recent weeks, it aggressively pursued deals with creditors and vendors despite withholding payments to conserve cash.
A bankruptcy filing could come just three weeks after a $550-million conditional financing commitment with GE Capital was announced.
Jim McTevia, managing partner of McTevia & Associates, a Bingham Farms turnaround firm, said he's not surprised that Borders is on the brink of filing. He said Borders has had to attempt to develop a solid business plan when it's lost millions of dollars and is in an industry in major transition from print to digital products.
"Borders is fighting a unique battle," McTevia said. "They have to re-engineer the entire company. The only way they can do that is in the courts."
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