There will be no storybook ending for Borders. The 40-year-old U.S. book seller could start liquidating its 399 stores as early as Friday.
The Ann Arbor, Mich.-based chain, which helped pioneer the big-box bookseller concept, is seeking court approval to liquidate after it failed to receive any bids that would keep it in business.
The move adds Borders to the list of retailers that have failed to adapt to changing consumers’ shopping habits and survive the economic downturn, including Circuit City Stores Inc., Blockbuster and Linens ‘N Things.
Unlike those companies, however, Borders has had no stores in Canada.
On Thursday, Borders is expected to ask the U.S. Bankruptcy Court of the Southern District of New York at a scheduled hearing to allow it to be sold to liquidators led by Hilco Merchant Resources and Gordon Brothers Group. If the judge approves the move, liquidation sales could start as soon as Friday; the company could go out of business by the end of September.
Borders’ attempt to stay in business unraveled quickly last week, after a $215 million “white knight” bid by private-equity firm Najafi Cos. dissolved under objections from creditors and lenders. They argued the chain would be worth more if it liquidated immediately.
“We were all working hard toward a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, e-reader revolution, and turbulent economy, have brought us to where we are now,” said Borders Group president Mike Edwards in a statement.
Simba Information senior trade analyst Michael Norris predicts the closing also could cause sales of electronic books to fall.
“Bookstore employees don’t just sell books, they sell the activity of reading, and this decision throws thousands of them out of work,” he said. “This industry is going to slowly figure out that a lot of e-book readers still use bookstores all the time to discover what’s new before heading home to buy it for their e-reading device.”
Borders, for one, entered the electronic book market last year with Kobo Inc., a Toronto-based spinoff of Canadian book retailer Indigo Books & Music Inc.
Owners of the Kobo e-reader will still be able to use Kobo software to buy and read books. And Kobo officials said users of Borders e-book accounts, which began transitioning to Kobo in June, will be able to access their e-books uninterrupted.
Borders filed for bankruptcy protection in February after being hurt by tough competition from online booksellers and discounters. It hoped to successfully emerge from bankruptcy protection by the fall as a smaller and more profitable company, but pressure from creditors and lenders eventually led the chain to put itself up for sale and finally, seek approval to liquidate.
At its peak, in 2003, Borders operated 1,249 Borders and Waldenbooks, but by the time it filed for bankruptcy protection in February that had fallen to 642 stores.
