Borders Files for Reorganisation Relief Under Chapter 11
Borders Group, a specialty retailer of books, has filed for reorganisation relief under Chapter 11. It has secured a commitment for US$505m in debtor-in-possession financing and continues to conduct business in ordinary course. According to the company, Chapter 11 provides Borders with best route to reorganise and reposition itself for the long term.
Mike Edwards, Borders Group president, said: “It has become increasingly clear that in light of the environment of curtailed customer spending, our ongoing discussions with publishers and other vendor related parties, and the company’s lack of liquidity, Borders Group does not have the capital resources it needs to be a viable competitor and which are essential for it to move forward with its business strategy to reposition itself successfully for the long term.
“To position Borders to remedy this condition, Borders Group, with the authorisation of its board of directors, has filed a petition for reorganisation relief under Chapter 11 of the Bankruptcy Code. This decisive action will give Borders the opportunity to achieve a proper infusion of capital in order to have the opportunity to have the time to reorganise in order to reposition itself to be a successful business for the long term.
“In this regard, operating under Chapter 11, Borders has received commitments for US$505m in debtor-in-possession (DIP) financing led by GE Capital, Restructuring Finance. This financing should enable Borders to meet its obligations going forward so that our stores continue to be competitive for customers in terms of goods, services and the shopping experience. It also affords Borders the opportunity to move forward in implementing the appropriate business strategy designed to reposition Borders to be a potentially vibrant, national retailer of books and other products,” Edwards explained.