201101311354.jpgIn 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.


  1. I was just there with my daughter not 15 minutes ago. She remarked on how there didn’t seem to be any new manga on the shelves. Our household would be quite sad to see Borders go…

  2. The new financing is dependent on publishers taking IOUs, which is unlikely.

    Could it get DIP financing if it goes into Chapter 11?

    And according to a filing from today, UBS purchased 3.3 Million shares (4.9%) on 12.31.2010 . The stock is trading at a two-year low. Down 14% today, or about a third since the euphoric high of the GE financing announcement Friday morning.

  3. I got an email today from Borders offering free shipping with no minimum purchase. They really seem to be trying to spur sales.