As expected, Borders has filed for Chapter 11 bankruptcy. Jim Milliot and Judith Rosen report:
According to Borders, the financing should enable Borders to operate the stores that remain open in a “normal course” including honoring its Borders Rewards program, gift cards and other customer programs. Additionally, the company said it expects to make employee payroll and continue its benefits programs for its employees. The announcement made this morning was foreshadowed last night when it implemented an ordering freeze and Ingram, its lifeline to the publishers, stopped shipping books.
Publishers are on the hook for hundreds of millions of dollars led by Penguin Group (USA) which is owed $41.1 million, followed by Hachette at $36.9 million, Simon & Schuster at $33.8 million, Random House at $33.5 million, and HarperCollins at $25.8 million. Neither major book distributor, Ingram or Baker & Taylor were among the leading creditors, and only one book distributor, National Book Network, which is out $2 million. The filing listed $1.27 billion in assets and $1.29 billion in liabilities. Borders said it expects to be able to pay vendors for merchandise shipped to it after today’s filing 16; those owed money prior to the filing will only be paid with the approval of the bankruptcy court.
According to court documents, Borders owes Diamond Comic Distributors $3,906,549.94. While a sizable amount, it’s clear that many publishers had been wary of Borders for some time and had cut their losses when possible.
Heidi MacDonald is the founder and editor in chief of The Beat. In the past, she worked for Disney, DC Comics, Fox and Publishers Weekly. She can be heard regularly on the More To Come Podcast. She likes coffee, cats and noble struggle.