Widely predicted as an inevitability that would not be put off past month's end, Borders official filed for reorganizational relief under Chapter 11 bankruptcy.
Borders announced the long-rumored filing Wednesday, saying it would close nearly one-third of its stores (at least 200) and would continue "normal" business at the surviving U.S. stores. A timeline has not been publicly unveiled for its restructuring process.
Rumors of Borders' potential demise into bankruptcy gained steam through late 2010 and, increasingly, throughout January. The big-box book retailer intimated twice in as many months that it would have to delay payments to creditors and/or vendors in an attempt to bolster its capital position. Borders also reportedly was trying desperately to renegotiate terms with financiers at Bank of America and General Electric, among others. These developments all helped tank a stock that was already trading below $0.50.
A late 2010 poll conducted by The Street found that more than two-thirds of respondents believed a Borders Chapter 11 filing was likely. In the resulting fallout and that of the first announcement of delayed vendor payments, at least one major publishing company reportedly stopped all shipment of books to Borders, fearing what now appears to be inevitable.
Brian Shappell, NACM staff writer