Breaking: rumours on Borders bankruptcy
source of the rumours: a report on Bloomberg.com citing “three people familiar with the matter”
Borders has declined to comment. No surprise there.
It has been a little over two weeks since Borders secured the services of law firm Kasowitz, Benson, Torres & Friedman, “restructuring” experts who according to the Wall Street Journal were tasked with keeping Borders out of bankruptcy court, once again according to unnamed sources.
It was just last week that Borders announced they secured new funding from GE Capital, though likely not on the best terms, and even the announcement [details reported at Forbes.com] contained some caveats,
“GE Capital’s commitment is dependent upon the completion of supporting financial arrangements with the company’s vendors and landlords, as well as its finalization of a store closure program, among other conditions.”
As we heard on Sunday, Borders Delays Payments To ‘Vendors, Landlords and Others’ – of note first because it was announced on a Sunday and also because it looks really, really bad. Not paying the rent, no matter what the reason, is not a way to inspire confidence.
When the Bloomberg report hit, at 3:54pm (just six minutes before the close of markets) Borders stock tanked – losing 35% in a flurry of last minute trades, closing at a mere 47 cents a share. It’ll be interesting to see what the stock does tomorrow, and whether there will be any official announcement from Borders now that the news has leaked.
A follow-up on Bloomberg Businessweek provides the handy details,
“Borders has posted almost $800 million in losses since 2006 as it lost market share to competitors such as Amazon.com Inc. The retailer has also been slow to embrace digital reading, which continues to gain popularity with consumers.”
So, while I’m calling this a rumour for now, it definitely feels like a very real, very bad thing.
I work at Borders and it’s not looking good. We have no inside information, but we are only receiving shipments now from Ingram and B&T; no publishers are currently shipping to us.
Right now, it looks like they’ll file for chapter 11 before the end of the month. What scares us all is the idea that management has so lost credibility that they won’t be able to pull the restructuring off and will have to liquidate. That would really be too bad, since there are a lot of stores out there that are still making money. Mine isn’t one of them, but I hate to see profitable bookstores close.
Comment by cmchan — 3 February 2011, 16:02 #