In today’s Borders Death Watch™ news, the troubled chain is suspending payments to vendors and landlords.
Borders announced Sunday evening that it was delaying January payments to vendors and landlords in a move to conserve cash. The action will almost certainly end any hope Borders has of winning approval from publishers of its proposal to exchange missed December payments for notes. Borders had wanted publishers to approve the offer before the January payment was due, but many publishers were leaning towards rejecting the offer and some were waiting to see how the chain handled the January bills. Delaying payments was not something they wanted to hear. In addition to not paying the major houses, it is unclear if Borders paid any presses; in December Borders paid independent and small presses.
Although there is a financing plan on the books, it is dependent on publishers deciding to go along with Borders’ “give us some time and we’ll come up with the cash” business plan.
That is unlikely.
What is more likely: a Borders bankruptcy. The big question is whether it will be a Chapter 11 — a financial reorganization — or a Chapter 7 — liquidation.