Bookstore giant Borders files for bankruptcy
See the original ABC news article here
US bookstore chain Borders announced that it has filed for bankruptcy protection from its creditors so that it can reorganise and re-emerge as "a stronger and more vibrant book seller."
"It has become increasingly clear that in light of the environment of curtailed customer spending, our ongoing discussions with publishers and other vendor related parties, and the company's lack of liquidity, Borders Group does not have the capital resources it needs to be a viable competitor and which are essential for it to move forward with its business strategy to reposition itself successfully for the long-term," Borders president Mike Edwards said in a statement.
"To position Borders to remedy this condition, Borders Group, with the authorisation of its board of directors, has filed a petition for reorganisation relief under Chapter 11 of the Bankruptcy Code," he said, citing the US statute that allows him to fend off creditors seeking repayment while the company regroups.
But the closure will not affect Australian stores, which are run independently of the US outfit.
In a statement on the Borders Australia website, the company said the only link it had with US stores was the name.
"Borders stores in Australia, New Zealand and Singapore are 100 per cent owned by REDgroup Retail, a local Australian private company," it said.
"Our stores have no relationship or link with Borders stores in the US."
In recent years Borders in the US has lost millions of dollars, in an industry in major transition from print to digital products.
In July, the company launched an online electronic book store to challenge Amazon, Apple and Barnes and Noble in the fast-growing market for digital books - companies that the Ann Arbor, Michigan based chain is seen as having badly trailed in the rapidly changing book market.
Mr Edwards said Borders has received commitments for $US505 million in Debtor-in-Possession (DIP) financing led by GE Capital, Restructuring Finance.
"This financing should enable Borders to meet its obligations going forward so that our stores continue to be competitive for customers in terms of goods, services and the shopping experience," Mr Edwards said.
"This decisive action will give Borders the opportunity to achieve a proper infusion of capital in order to have the opportunity to have the time to reorganise in order to reposition itself to be a successful business for the long-term," Mr Edwards said.
Recent news reports predicted the reorganisation filing, after Borders Group delayed payments to vendors for two months and in recent weeks aggressively pursued deals with creditors and vendors despite withholding payments to conserve cash.
"We are confident that, with the protection afforded under Chapter 11 and with the support of employees, publishers, suppliers and creditors, and the reading public, a successful reorganisation can be achieved enabling Borders to emerge from the process as a stronger and more vibrant book seller," Mr Edwards said.
Borders Australia and Angus & Robertson chains collapse
Written by Patrick Stafford
See the original article here
The owner of the Australian book selling chains Borders and Angus & Robertson has been placed in the hands of administrators, less than 24 hours after Borders in the US filed for chapter 11 bankruptcy protection.
Ferrier Hodgson was appointed as the company’s administrator late on Thursday afternoon. Partner Steve Sherman is handling the matter.
RedGroup Retail were contacted but a spokesperson declined to comment.
The first creditor’s meeting will take place within eight working days of the collapse.
So far reasons have not been given for the collapse, but the book industry has been hit hard by falling consumer confidence, a spending shift towards online book sellers and the rise of eBooks.
RedGroup Retail is also believed to be carrying a substantial level of debt.
RedGroup operates both the Borders and Angus & Robertson chains in Australia. The Angus & Robertson chain alone has over 100 stores with 60 franchises, with the chain operating in Australia since the 1800s.
Borders opened its first store in Australian in 1998, and has since expanded around the country.
The appointment comes after Borders filed for bankruptcy in the United States overnight. The company said 30% of its stores are unprofitable and losing about $US2 million a day.
The Australian operation is not financially related to the Borders chain in the United States.
The collapse comes after a tumultuous few months for RedGroup Retail.
Despite preparing the company for a float or trade sale, last October managing director David Fenlon resigned after the company unveiled a full-year loss of $43 million for the 2009-10 year.
The company, which is owned by private equity group PEP, was also forced to get a waiver from its lenders after breaching some of its financial covenants.
The company employs about 2500 people. Both chains are expected to continue to trade while administrators assess the financial position of the company.