Moribund and embattled bookstore chain Borders has confirmed that it will begin liquidation porceedings for its remaining stores as soon as this Thursday, with the intent to liquidate the entire chain by September.
This follows the failure of the book chain to secure a last minute buyer for the retailer, which filed for bankruptcy protection in February following poorer than expected sales performance for the 2010 holiday season compounded by competition from its next closest competitor Barnes & Noble and the popularity of ebook platforms such as Amazon’s Kindle and B&N’s own nook reader cutting into its shrinking sales.
Borders was instrumental in aiding the surge in popularity of manga in the US, as the chain was responsible for up to half of all purchases from all the major publishers before declaring bankruptcy earlier this year, the effects of which were felt when former publisher Tokyopop let go of the last remaining full-time editors due to the shortfall in revenue from the Borders bankruptcy and eventually decided to shut down publishing operations earlier this year.
With the forthcoming liquidation, 10,700 people are expected to lose their jobs and add to next month’s jobs report, further straining short-term economic indicators.
[via Comics Beat]
I wanted to reach out to you and give you an update on Borders’ reorganization process. As you know, last week we submitted a proposal from Hilco and Gordon Brothers as the stalking horse bid, which set the minimum bid requirement for the auction.
Following continued negotiations and the best efforts from all parties, no bidders have presented a formal proposal to keep our company operating as a going concern. Therefore, under the terms of our DIP financing agreement, we intend to present to the court for approval the proposal from Hilco and Gordon Brothers, under which these two companies will purchase our stores’ assets and administer the liquidation process. We will submit this proposal at a hearing scheduled for Thursday, July 21, and we will not proceed with the auction originally scheduled for tomorrow, July 19.
All of us have been working hard towards a different outcome, and I wish I had better news to report to you today. The truth is that Borders has been facing headwinds for quite some time, including a rapidly changing book industry, eReader revolution, and turbulent economy. We put in a valiant fight, but regrettably in the end we weren’t able to overcome these external forces.
For decades, our stores have been destinations within our communities – places where people have sought knowledge, entertainment, and enlightenment and connected with others who share their passion. Whether you work in our stores, distribution centers, or at the Store Support Center in Ann Arbor, each of you has played a valuable role in helping ignite the love of reading in our customers. Together, Borders and Waldenbooks associates have helped millions of people discover new books, music, and movies, and I hope you’ll take pride in the role we’ve played in our customers’ lives.
Now we must begin switching gears and preparing for the wind-down process, which we expect to begin for stores as soon as this Friday, July 22 and conclude by the end of September. Wind-down will begin in phases in other areas, such as our Store Support Center and distribution centers, over the next week. Please know that we are committed to sharing information with you as quickly as possible. To that end, you should expect to hear from your manager by the end of this week with details regarding separation information, severance, benefits, and other resources for employees. You have my assurance that we will do whatever we can to help our employees through this transition.
In closing, I’d like to express how much I appreciate each and every one of you and all that you’ve done. The last few months have been stressful, uncertain times, but you’ve stood by Borders and have continued to impress me with your dedication, resilience, and strong drive to fight until the very end to save our company. Whether you’ve been with Borders for a few months or several years, I hope you know how much I value you and all that you’ve contributed. The coming weeks will be difficult as we wind down operations, but I hope you’ll continue to hold your head high. You’ve done me proud and, from the bottom of my heart, I thank you.
Update 2 – In documents filed through the Southern District of New York during the initial Chapter 11 filing in February, Borders owes Hachette Book Group USA US$36.9 million, Viz Media distributor Simon & Schuster US$33.8 million, Kodansha Comics distributor Random House US$33.5 million, and Diamond Comic Distributors US$3.9 million.