A group of Borders Group landlords have banded together to object to the proposed Chapter 11 bankruptcy sale of Borders to Direct Brands. The landlords argue that the timing of the proposed sale and the lack of disclosures leave them with too little information and too little time to make an educated decision about the sale. According to the landlords, the main problem with the proposed sale is that Direct Brands has not revealed which, if any, of the remaining Borders stores will be operated after bankruptcy. The landlords won’t find out whether their lease will be renewed until after their deadline to object to the sale, after the auction, and after the proposed sale hearing.
Direct Brands LLC, a direct marketer that owns the Book of the Month Club business, has bid $450 million for bankrupt Borders Group Inc. bookseller. If Direct Brands succeeds in its bid, Borders would continue in business as a retailer, however, Direct Brands has not identified which contracts and leases it would assume.
Landlords are also concerned that if Direct Brands’ bid fails, Borders will immediately go into liquidation. A matter of fact, the bankrupt company has already setup a back up group of liquidators who can quickly sell off their company’s assets to satisfy their debts if the sale to Direct Brands collapses. The landlords are not comfortable remaining in the dark on the issues that will directly impact them and have requested that the bankruptcy judge slow down the process and require Borders and Direct Brands to reveal to them how their leases will be handled if the sale is successful.
(source: Bloomberg.com )