NEW YORK - There will be no storybook ending for Borders. The 40-year-old book seller could start liquidating its 399 stores as early as Friday.
The Ann Arbor, Mich.-based chain, which helped pioneer the big-box book-seller concept, is seeking court approval to liquidate after it failed to receive any bids that would keep it in business. The move adds Borders to the list of retailers that have failed to adapt to changing consumers' shopping habits and survive the economic downturn, including Circuit City Stores Inc., Blockbuster and Linens 'N Things.
On Thursday, Borders is expected to ask the U.S. Bankruptcy Court of the Southern District of New York at a scheduled hearing to allow it to be sold to liquidators led by Hilco Merchant Resources and Gordon Brothers Group. If the judge approves the move, liquidation sales could start as soon as Friday. The company could go out of business by the end of September.
Borders' attempt to stay in business unraveled quickly last week, after a $215 million "white knight" bid by private-equity firm Najafi Cos. dissolved under objections from creditors and lenders. They argued that the chain would be worth more if it liquidated immediately.
"We were all working hard toward a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, e-reader revolution and turbulent economy, have brought us to where we are now," Borders Group President Mike Edwards said in a statement.
Simba Information senior trade analyst Michael Norris said that a Borders liquidation could have far-reaching effects, putting thousands of people out of work at a time of high unemployment, particularly in Michigan, where Borders is based. The chain, which has been shrinking in recent years, has 10,700 employees.
The loss of Borders stores also will deal a blow to malls nationwide, according to real-estate sources.
Borders' move to close 228 stores while it reorganized in bankruptcy protection already increased the collective vacancy rate of shopping centers that contained a Borders to 9.3 percent from 4.2 percent, estimated Chris Macke, senior real-estate strategist at CoStar Group, the nation's largest provider of real-estate data. Macke calculated that the liquidation of the rest of the chain could increase the vacancy rate on that same basis to 18.8 percent. Borders stores average about 25,000 square feet, about half the size of a football field.
But perhaps the biggest impact of Borders going out of business will be to the consumer.