After failing to secure a buyer in Chapter 11 bankruptcy, Borders is headed to liquidation closing down 400 bookstores around the nation and putting 11,000 people out of work.
Borders was unable to overcome competition from larger rival Barnes & Noble Inc (BKS.N) and from Amazon.com Inc (AMZN.O), which began to dominate book retail when the industry shifted largely online. Borders, for which online sales represented only a small fraction of revenue, never caught up to its rivals' e-reader sales, namely Amazon's Kindle and Barnes & Noble's Nook.
Borders had hoped to sell itself to buyout firm Najafi Cos, which owns the Book-of-the-Month Club. While Najafi was willing to pay $215 million in cash and take on another $220 million in liabilities to acquire the assets, the deal fell apart last week after creditors objected to terms that would have allowed Najafi to liquidate after completing the sale.
A group of liquidators led by Hilco Merchant Resources will sell off the assets of Borders once they receive the bankruptcy court's approval. Secured priority creditors will receive payment first with unsecured creditors receiving very little or nothing from the bankruptcy liquidation. And while the failure of the proposed purchase by Najafi was the final blow that sent Borders into bankruptcy liquidation, the company's inability to secure support from critical creditors such as publishers and landlords ultimately was the problem that made Borders a company no investor was willing to purchase. It is estimated that Borders' bankruptcy will close and its remaining stores will be shuttered by September.
(source: Reuters.com )