Borders, the embattled bookseller in Chapter 11 bankruptcy, has finally found a potential buyer for its stores. Direct Brands has agreed to a $215 million opening bid for Borders Group. The bid will be placed at the bankruptcy auction where other bidders will be able to participate. However, at this point there does not seem to be any other serious bidders involved in Borders’ bankruptcy auction. The sale of Borders to Direct Brands is expected to be approved by the bankruptcy court by the end of this month.
The bookseller said last week it has an asset purchase agreement with Direct Brands, a company of Phoenix-based Najafi Companies, a private equity firm with $1.1 billion in assets.
Direct Brands would start the bidding and other bidders would be able to offer more through an auction in U.S. Bankruptcy Court in Manhattan. In addition to buying most of Borders assets, Direct Brands has offered to assume $220 million in liabilities.
Direct Brands, which includes Book-of-the-Month Club, Doubleday Book Clubs and Columbia House, was acquired by Najafi Companies in 2008. It plans to file a tentative purchase agreement before a court hearing on July 21.
Once Borders is sold to Direct Brands in bankruptcy, it is expected that many of its physical locations will be closed as the company transforms its business model from brick and mortar bookselling to an online system similar to Amazon.com. Some critics of the move have suggested that Borders should have made this change to its business model before bankruptcy. But the reality is that without bankruptcy, the bookseller would not have been able to free itself from a myriad of agreements that limited its flexibility and its ability to change.
(source: Nashuatelegraph.com )