Borders Group Closer To Liquidation After Najafi Bid’s Rejection

by San Antonio Attorney

Borders Group Inc has gone nearer to closing the business as a bankruptcy court judge granted a liquidation proposal of the bookstore when the plan to sell the business to a private equity firm failed.

The liquidation plan would sell the business to liquidators headed by Hilco Merchant Resources. If there are no other bidders that would offer more money to keep Borders in business, the company would close down about 400 of its stores that are operating, which will eliminate 11,000 employment, a Borders spokeswoman said.

The Hilco plan would generate an income of at least $250 million in cash. The bookstore would retain its brand name rights as well as its real estate, and then sell those assets to pay off creditors.

Najafi Cos, a private equity firm that owns the Book-of-the-Month Club, offered to pay $215 million in cash and assume $220 million in debts. Part of the offer was also to make the bookstore part of Direct Brands, a supplier of books, CDs, and DVDs.

But the creditors of Borders filed objections on the sale plan.

According to Najafi, it’s disappointed to lose the deal and is still open to continue negotiating. It also did not want Borders to liquidate.

Although liquidation is more likely with the company being sold to Hilco that gave a stalking horse bid, it is still possible that it will not happen.

The creditors of borders were concerned about the offer of Najafi would result in Border’s liquidation, so it would be better if liquidators like Hilco would buy the company.

The bidders can still offer more money before the auction on Tuesday provided that the offer will sustain the Borders operations.  Bidders are given until Sunday to make their offers, said Borders attorney Andrew Glenn.

Janney Capital Markets analyst David Strasser said that the liquidation of Borders could increase the value of Barnes & Noble.

Borders run 642 stores before it filed for Chapter 11 protection in February. Since the filing of bankruptcy, it had closed 226 of its stores.

The groups of liquidators are comprised of Hilco Merchant Resources, SB Capital Group, Gordon Brothers Retail Partners, Great American Group, and Tiger Capital Group.

 

–          Creditors are allowed to object to a debtor’s repayment plan.  This is why one needs proper representation by a San Antonio Bankruptcy attorney so any obstacles that arise from a Chapter 11 bankruptcy can be solved.

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