ANN ARBOR ? Bankrupt Borders Group Inc said Monday it has canceled its auction and will sell itself to a group of liquidators.
The No. 2 US bookseller announced the decision, saying it was not able to reach a deal for a going-concern sale to salvage its 400 remaining stores and 11,000 jobs.
A liquidation group led by Hilco Merchant Resources will begin liquidations as early as Friday, Borders said in a statement. The bookseller will seek bankruptcy court approval of the closing procedures at a hearing set for Thursday.
Borders, which employs about 10,700 people, scrapped a bankruptcy-court auction scheduled for Tuesday amid the dearth of bids.
The liquidation of the company’s remaining 399 stores could start as soon as Friday, and the chain is expected to go out of business for good by the end of September, the company said.
“Following the best efforts of all parties, we are saddened by this development,” said Borders Group President Mike Edwards. “We were all working hard toward a different outcome, but the head winds we have been facing for quite some time, including the rapidly changing book industry, [electronic reader] revolution, and turbulent economy, have brought us to where we are now.”
Borders? liquidation comes five months after the company filed for Chapter 11 bankruptcy protection with hopes of shedding unprofitable stores, cutting debt and reemerging by September as a viable company.
But the company ? which had closed more than 230 stores since its bankruptcy filing ? has continued to lose millions every month.
Borders last week had briefly lined up a prospective buyer: Phoenix-based private equity firm Najafi Companies, which owns Direct Brands, operator of the Book of the Month Club.
But Najafi pulled out of the deal when publishers and landlords objected to the proposed sale, arguing that nothing would prevent Najafi from liquidating Borders on its own, pocketing the cash and keeping valuable intellectual property for itself.
Instead, Borders will be sold to a team of liquidators led by Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC. The liquidators are expected to launch going-out-of-business sales as soon as Friday with the “wind-down” complete by September, a spokeswoman said.
During the bankruptcy process, major publishers turned into an obstacle to Borders? reorganization. They filed several objections to Borders? bankruptcy plans and, on Wednesday, objected to Borders? plan to allow Najafi to be the leading bidder for the company?s assets.
Borders’ top seven unsecured creditors, including publishers such as Simon & Schuster and Random House, were owed more than $193 million, according to bankruptcy documents filed in February.
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