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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.

Developing.

1 COMMENT

  1. According to the report, they are going to close about 220 stores in the next few weeks – that’s a big hit.

  2. I wonder if any of that $4 Million can be recovered from store returns? Diamond Book can transfer some of that stock to Diamond Comics, or push it into the remainder market.

    Or Borders warehouses thestock and eventually sells it, or it get liquidated.

    I suspect publishers will no longer be shipping direct to Borders. Ingram still has a business relationship with Borders, and carries most of the Big Six publishers. Of course, Borders loses a few points on margin, but maintains a pipeine of new product.

    Now to wait and see which stores close.

  3. C’mon already, just close them ALL and be done with it! Stop dragging this out.

    Everyone knows they’ll never recover, w/all the $ they owe to book publishers and in this economy…

  4. I also wonder if those losses were insured. I know when I worked for a company that shipped stuff to Circuit City a year before their bankruptcy, there were discussions about the insurance.

    The bigger question is, of that $3.9 million, which publishers are really on the hook. Hopefully, this won’t be a major disruption for comics ala the distributor wars of the mid-90s.

  5. This is unfortunate, but it seems whenever these things happen someone comes in to fill the gap, espcially when you have the “Big 2” structure in so many specialities.

    Take electronics. Circuit City closed, leaving Best Buy the lone big box retailer in that speciality. But hhGregg has come on fairly strong, opening stores in some now Circuit City-less areas.

    Course, the book market is significantly different. But Hastings, which is really only located in a few parts of the country, could see an opportunity to expand now.

  6. I agree, Snikt! Let’s fire everyone who works for Borders, close all the stores (some in communities with few bookstores), and leave a big vacuum in the book retailing landscape!

    Or the courts can try to restructure the company, surgically remove bad debts, and keep it solvent.

    As for Hastings, they are scattered all over the country, and typically avoid large markets. In this new retail landscape, where most business is now going online, I suspect Hastings will be unlikely to open new stores.

    Besides, if a Borders store was not successful in a market, why would a Hastings store be any more successful?

    Al, I suspect each store closing will advertise the closure. Possibly a few weeks of “Everything 20% Off!”, then viable merchandise is returned to the warehouses, and the rest of the store merchandise is slowly reduced down to $1.

    Remaindered titles usually show up at Tales Of Wonder.

  7. You can’t go wrong with ‘Tales of Wonder’. I’ve been a customer for years. They get all my comic related hardcover business.

  8. Heidi, it looks like your neighborhood store will close…

    461 Park Ave. (57th Street)
    576 Second Avenue (32nd Street)
    100 Broadway (Wall Street)

    which leaves the Penn Station and Columbus Circle stores in Manhattan, and a store near Forest Hills, Queens.

  9. Looks like some mall closings on that list, which is unfortunate b/c of the walk-through, but they’re probably costly to maintain.

    The closing in King of Prussia hits closest to me, but it looks like the store in Center City Philadelphia has been spared, for now (as far as I know, it’s the only one in Philly).

  10. If I was Barnes & Noble I’d buy out every key location that’s closed and install my store. But I bet they’re just barely holding on too.

  11. Torsten Adair: “I agree, Snikt! Let’s fire everyone who works for Borders, close all the stores (some in communities with few bookstores), and leave a big vacuum in the book retailing landscape!

    Or the courts can try to restructure the company, surgically remove bad debts, and keep it solvent.”

    Torsten, “the book retailing landscape” has become a WASTELAND, wake up already. Amazon and other online retailers won. Why pay full retail price for a book you can get 30% (or more) off online?

    They never had a chance.

    I know change is hard, but keep a stiff upper lip! :-O

  12. If the location isn’t working for Borders, why would it work for Barnes & Noble?

    Big box retail is dead.
    Big Box stores succeeded because they offered a wide selection and cheap prices.
    But how do you compete with a website which offers even more books and cheaper prices, and pays cheap rent in some industrial park?

    Are any of the Borders Express airport stores closing? Those are probably the most lucrative locations, as people have time to browse and need something to read on the plane.

  13. “Torsten, “the book retailing landscape” has become a WASTELAND, wake up already. Amazon and other online retailers won. Why pay full retail price for a book you can get 30% (or more) off online?”

    Over the last year or so it’s been pretty easy to get books cheaper at Borders than Amazon, thanks to regular 40% or more off coupons.

  14. heh…
    I’m getting it from both sides…
    “Paper comics aren’t doomed, you’re so pessimistic!”
    “Take off those rose-colored glasses, bookstores are soooo Twentieth Century!”

    Half-full or half-empty?
    I say the glass is too big.

  15. Of course, that also seems to have devalued them a bit, as I won’t shop there now without a coupon.

  16. The Phoenix Market has 7 of the nine stores on the closing list, leaving two on the fringes of the valley. At least one of the two is within five miles of where I live but the other would be a 90 mile round trip.

  17. Of course, that also seems to have devalued them a bit, as I won’t shop there now without a coupon.

    Ditto that. Plus, even the discounted (coupon) prices are about even with Amazon after sales tax is applied. If you’re shopping for comics/GNs, Borders really can’t compete with the online options (DCBS/InStockTrades, Cheapgraphicnovels.com, TFAW.com, Tales of Wonder, etc.).

  18. I can’t say it’s surprising–honestly, I find myself feeling it’s all a bit anti-climactic–but it’s a sad day, nonetheless.

    At this point, I just hope smaller publishers won’t be hurt by this (though it’s hard to see how some of them won’t be).

  19. Torstein said:
    >>I’m getting it from both sides…<<

    I think your viewpoint is influenced by your work, which gives you a perspective most internet commentators lack (myself included.) I think you make a pretty good point about the courts letting Borders restructure.

    I tend to have a more pessimistic view of both the Direct Market and Big Box bookstores, but some of that is probably influenced by my dislike for a lot of the current content the Big Two are putting out now.

  20. “Hopefully, this won’t be a major disruption for comics ala the distributor wars of the mid-90s.”

    It won’t be like that. It’ll be far worse.

    The distributor shake out was a reenactment of “Highlander” (‘There can only be one’). This is more like a reenactment of “Crisis on Infinite Earths” (“businesses will live, businesses will die, and the industry wil never be the same”)