We called this a couple weeks ago, but now it's official. Borders is officially filing bankruptcy, and will be closing down at least 30 percent of its stores in the next few months. That means as many as 2,000 jobs may be going away.
Approximately 152 "underperforming stores" of the 508 in the chain will be closing by the end of April. California is by far the state with the most closures, but you can see if your local store is on the list. The company expects to be able to continue to meet employee payroll obligations for those remaining, and continue their benefits programs. Borders also plans to serve customers as usual, including honoring its Borders Rewards program, gift cards and other customer programs.
"It has become increasingly clear that in light of the environment of curtailed customer spending, our ongoing discussions with publishers and other vendor related parties, and the company's lack of liquidity, Borders Group does not have the capital resources it needs to be a viable competitor," said Mike Edwards, Borders Group President, in a press release.
"To position Borders to remedy this condition, Borders Group, with the authorization of its board of directors, has filed a petition for reorganization relief under Chapter 11 of the Bankruptcy Code. This decisive action will give Borders the opportunity to achieve a proper infusion of capital in order to have the opportunity to have the time to reorganize in order to reposition itself to be a successful business for the long term."
So Borders may be down, but not out?
"We are confident that, with the protection afforded under Chapter 11 and with the support of employees, publishers, suppliers and creditors, and the reading public, a successful reorganization can be achieved enabling Borders to emerge from the process as a stronger and more vibrant book seller," concluded Edwards.
Borders is receiving commitments for $505 million in financing from GE Capital to restructure. No one knows yet what will happen to the company's major unsecured creditors, which include major publishers that provide books to Borders, such as Penguin, Hachette Book Group USA, and Simon & Schuster. You can bet that the employees and authors working with those companies will also feel the pinch as Borders closes many of its stores.
Next: Top 10 Companies Hiring This Week