NEW YORK (Reuters) - A judge gave Borders Group Inc BGPIQ.PK more time to come up with a plan to exit bankruptcy after a company lawyer said multiple potential suitors had expressed interest in buying the bulk of the bookseller’s stores.
The retailer’s sale process is “significantly more robust” than it was weeks ago, with “multiple parties” expressing interest in a majority or nearly all of its stores, the attorney, Andrew Glenn, said at a hearing in U.S. Bankruptcy Court in Manhattan on Thursday.
Private equity firm Gores Group is in talks to buy more than half of Borders’ remaining stores, the Wall Street Journal reported on Wednesday, citing people familiar with the matter. A Gores representative declined to comment on Thursday.
Glenn would not confirm the newspaper report, and a Borders spokesperson said the company had no comment on the sale process.
Judge Martin Glenn granted Borders’ request to extend by 120 days its exclusive right to file a proposal to bring the bookstore chain out of bankruptcy. The judge, no relation to Andrew Glenn, rejected opposition by the creditors’ committee.
Borders, which helped pioneer the concept of book superstores, filed for bankruptcy in February after years of falling sales made it impossible to manage its debt load.
Without the extension, the company’s exclusive time period to file a bankruptcy exit proposal would have expired June 16, allowing other groups to propose their own reorganization or sale plans for the company. The exclusivity window now extends to October 14.
The creditors committee had asked to be exempted from exclusivity rules so that it could have a say in Borders’ plan.
“We’re not looking to file a separate plan,” committee attorney Bruce Buechler said at the hearing.
Rather, he said, the committee wanted a hand in the process to ensure that Borders negotiated with the committee and “kept us in the loop.”
Judge Glenn said the argument, while “strong,” was not enough to block the extension.
Andrew Glenn said he believes the sale process could conclude in two to four weeks.
“We’ve been getting slaughtered in the press,” he said, citing recent reports that the company has sought to end its long-time in-store cafe agreement with Starbucks Corp (SBUX.O) unit Seattle’s Best Coffee. “We want to send a message to everyone that we’re proceeding along the right path, and will continue to proceed along the right path.”
SEATTLE‘S BEST OUT
Separately on Thursday, Judge Glenn preliminarily approved Borders’ move to terminate its 2004 partnership agreement with Seattle’s Best, whose cafes were in more than 400 Borders locations before Borders shuttered 225 stores prior to filing for bankruptcy.
Borders said running its own cafes or finding a new vendor would save money and allow it to better tailor menus to its customers.
Seattle’s Best objected, taking issue with language in Borders’ court papers that would have allowed it to keep operating the cafes for 45 days after the termination. The coffee maker said it did not want its trademarks being used to support a company that is looking to replace it as vendor.
Judge Glenn’s approval is contingent on the parties resolving what constitutes a Seattle’s Best trademark. The parties agreed that Borders cannot use Seattle’s Best logos after termination, but there was less certainty over the fate of artwork displays, wall coloring and other details.
Judge Glenn also approved Borders’ request to break off 100 other contracts, including five with Otis Elevator Co (UTX.N), seven maintenance contracts with Schindler Elevator Corp (SCHN.S), six rental agreements with Pure Health Solutions Inc, and dozens of linen service agreements.
The case is In re Borders Group Inc, U.S. Bankruptcy Court, Southern District of New York, No. 11-10614.
Editing by Steve Orlofsky