Borders had been in talks with a single private equity firm, Najafi, whose bid was rejected by unsecured creditors Wednesday. Those creditors — which include Penguin, HarperCollins, Random House and Perseus Books Group — were concerned that they might not be appropriately compensated after a low Najafi takeover bid, because the private equity firm could later liquidate Borders without them benefiting.
Talks with Najafi dissolved after an all-night negotiating session failed to hammer out an agreement that would have mandated the firm continue to operate Borders as a going concern, Bloomberg reports. Among the major creditors are landlords for the remaining 405 bookstores Borders still operates (it has closed 237 stores), and their concerns about broken leases were among those that led to the latest surprising wrinkle in the case.
However, if the liquidators are outbid at the bankruptcy auction, there will be another auction on Tuesday. But such an outcome is not likely because no other serious bidder has been identified by Borders. Also, as we have noted in the early stages of this bankruptcy, the creditors seem to have lost faith in the viability of Borders Group. And those creditors who might have some faith that the company could survive after restructuring in bankruptcy, don’t seem able to agree on terms that would make it possible for the company to sell itself to interested parties.