America will get a good idea by 5 p.m. Sunday whether the nation will completely lose its second largest bookstore chain or not. Borders is close to liquidation after the company said it will not seek approval for white knight Najafi's bid in U.S. Bankruptcy Court Friday.
Borders was close to approval on an agreed upon deal with Najafi Cos. for $215 million and an assumption of $220 million in debt in bankruptcy proceedings, but the deal has apparently fallen apart. Borders, based in Ann Arbor, Michigan, faced objection to the agreed upon deal with Najafi as creditors said Najafi could simply buy assets and liquidate the company.
Creditors preferred another bid from liquidators Hilco Merchant Resources and Gordon Brothers, saying it was stronger. Creditors argued that bid, a clear liquidation deal, involved more cash than the one from Najafi. Creditors hoped Najafi would submit a higher bid, but Najafi is standing by its original offer.
Borders now says it will accept bids until 5 p.m. Sunday and will give notice to the bankruptcy court if no other bid emerges. Regardless, the odds that Borders will soon liquidate, closing its remaining 400 bookstores, are strong.
Borders began with a single store in 1971, and the company grew to more than 1,000 bookstores nationally before it began closing stores a few years ago. Borders currently has 405 stores, after closing more than 200 this year when it filed for bankruptcy.
Brick-and-mortar bookstores have struggled since the recession and the fast growth of digital books. Late last year Barnes and Noble, America's largest bookstore chain, said it was in discussions for a possible sale and looking at other strategic options for the future since it was losing money as buyers pulled away from hardcover books, the most lucrative product brick-and-mortar stores have traditionally sold.
Borders has struggled for years. The company opted for a decade to avoid developing its own online bookstore, as did Barnes and Noble, America's largest bookstore chain, partnering for many years with Amazon instead before launching its own online bookstore in the past year. That move was viewed by many industry observers as costly to Borders' future.
Borders also never entered the market with a digital reader as did Barnes and Noble with its Nook.