Borders Group Inc. won a reluctant approval from the bankruptcy court to pay a $1 million fee to extend their bankruptcy loan’s expiration date. Bankruptcy Judge Martin Glenn accused the lender of “raping” the bookstore and said that he was very close to denying the transaction.
“The reluctance is I think you’re getting raped, is the best way I can describe it,” Judge Glenn said, according to the audio transcript. “These fees are out of sight. The other side of the coin is, it’s the only game in town, so it is with reluctance that I approve the motion. A million-dollar fee for very minimal extension in these dates is an extraordinary fee, very close to me saying, ‘No.'”
With the fee paid and the expiration date of the bankruptcy loan extended, Borders now has until July 1st to find a buyer so they can avoid liquidating 40 stores. The bookstore was in a desperate bid to avoid the liquidation of the 40 stores saying that many of them were profitable and the loss of those profitable stores could make finding a buyer close to impossible. But is the demand of a $1 million fee for a short extension of the expiration debt a sign of the bankruptcy lender’s lack of faith in the company? Possibly.
Border’s survival and its future viability in its current form have been questioned by everyone from the company’s vendors to the publishers refusing to make any concessions for future credit terms. The company’s main hope lies in its ability to find a buyer by July 1st, short of that, they may be forced to liquidate at least some of their stores.
(source: Bloomberg.com )