* Hearing in U.S. Bankruptcy court Thursday
* Plans to hold closing sales starting Friday
By Nick Brown
NEW YORK, July 21 Borders Group Inc BGPIQ.PK
is set to seek court approval on Thursday for the effective end
of its 40-year-old business by hiring liquidators to conduct
closing sales at its nearly 400 stores.
Lawyers for the bankrupt bookstore chain are expected to
ask for Manhattan U.S. Bankruptcy Judge Martin Glenn's blessing
on the liquidation plan. The agreement would likely bring in
between $250 million and $284 million the company can use to
pay back creditors.
Borders, which helped pioneer the concept of book
superstores, thought it had a buyer willing to keep the
business alive when private-equity firm Najafi Cos, owner of
the Book-of-the-Month Club, offered $215 million in cash and
$220 million in assumed liabilities for the company.
But the deal fell apart amid objections from creditors,
forcing the second-largest book retailer to announce plans to
close its doors.
Assuming the liquidation plan is approved, a consortium of
liquidators led by Hilco Merchant Resources and Gordon Brothers
Retail Partners will sell off Borders' merchandise and
furniture in a process likely to start as early as Friday and
be completed by September, according to plans set out in court
Borders will keep the rights to its brand name and leases
and hold separate auction processes for those assets. Gordon
Brothers unit DJM Realty will market the leases, although a
timeline for that sale process has not been set.
Borders, founded in 1971, had hoped a "white knight" buyer
would emerge, but it canceled a planned auction Monday night
after receiving no bids.
The company said in court papers on Monday it was
entertaining a potential offer for about 30 of its stores, but
a deal appeared unlikely now that bidding deadlines have
Borders, which declared bankruptcy in February, was unable
to overcome competition from larger rival Barnes & Noble Inc
(BKS.N) and from Amazon.com Inc (AMZN.O), which began to
dominate book retail when the industry shifted largely online.
The company also never caught up to its rivals' e-reader sales,
namely Amazon's Kindle and Barnes & Noble's Nook.
The case is In re Borders Group Inc, U.S. Bankruptcy Court,
Southern District of New York, No. 11-10614.
(Reporting by Nick Brown; editing by Andre Grenon)