Major U.S. book retailer Borders Group has filed for Chapter 11 protection under the United States Bankruptcy Code. The company said it plans to reorganize, which will see the chain close roughly 30 percent of its stores.
"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," said Mike Edwards, Borders Group President.
Edwards also revealed that the company has received commitments of US$505 million in Debtor-in-Possession financing, led by GE Capital. "This financing should enable Borders to meet its obligations going forward so that our stores continue to be competitive for customers in terms of goods, services and the shopping experience. It also affords Borders the opportunity to move forward in implementing the appropriate business strategy designed to reposition Borders to be a potentially vibrant, national retailer of books and other products."
Borders was founded in 1971 in Ann Arbor, Michigan; it did not open its second location until 1986. The company was acquired by Kmart in 1992, merged with rival Waldenbooks, then spun off as Borders Group. In the late 1990s, the company attempted international expansion, but after a decade, was largely unsuccessful. By 2009, all of Borders' directly owned overseas locations had been sold. Seventy-two stores in the UK, the company's biggest expansion market, were closed at the end of 2009.
According to the Associated Press, the last time Borders Group saw a profit was in 2006. The company's revenues have dropped by US$1 billion since then. At its peak in 2003, Borders operated 1,249 locations, a combination of Borders and Waldenbooks stores. At the start of January, the stock price for Borders Group fell under US$1.00 per share.