Borders files for bankruptcy

Feb. 16, 2011 07:42 AM

Detroit Free Press

Borders Group Inc. filed for Chapter 11 bankruptcy protection Wednesday morning after five years of turnaround efforts failed to return the Ann Arbor, Mich.-based bookseller to health.

In a statement, the nation's second-largest bookseller said it would close 30 percent of its stores, or about 194 in the coming weeks.

It received $505 million in debtor in possession financing led by GE Capital.

Borders ended its bankruptcy avoidance effort with round-the-clock efforts to work out survival deals with lenders and vendors.

The filing, rumored for weeks, comes just three weeks after a $550-million financing commitment with GE Capital was announced.

The restructuring could release the company from its brick-and-mortar shackles as it closes underperforming stores and sheds leases, said Ken Dalto, a Farmington Hills, Mich.-based turnaround expert.

"They could be merged or bought by Barnes & Noble out of bankruptcy to create one super bookseller in the United States," he said.