Borders to File for Bankruptcy?

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Book retailer Borders Group Inc. has announced a major restructuring that will involve the closure of many stores. The company said January 27 that it had received a financial commitment from GE Capital Restructuring Finance amounting to $550 million. But the financing comes with several conditions, including closing under-performing stores. A source close to Borders said that as many as 150 out of 650 stores may be closed. Spokeswoman Mary Davis confirmed that the company is finalizing a closure program by identifying under-performing stores. The stores will be closed as soon as it is practical. However, no confirmation as to which stores or how many would be closed has been made.

Earlier this year, Borders disclosed that they are delaying payments to some vendors. At present, the company is holding discussions with some vendors and landlords on restructuring their debts. All this has led to speculation that Borders may file for bankruptcy protection.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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