updated 05:50 pm EST, Fri February 11, 2011
Borders near Chapter 11 bankruptcy
Borders' financial troubles in the e-book era could come to a head early next week after a leak has revealed it's close to bankruptcy. The bookseller is now believed to be filing a non-permanent Chapter 11 bankruptcy as soon as Monday or Tuesday. Its plan would see it get debtor-in-possession financial backing during the bankruptcy of as much as $450 million from Bank of America or GE, but it would also close 200 of its existing 674 stores, the WSJ sources behind the leak said.
Liquidating firms had been pushing to get control of the closures and could shutter as many as 50 more if they obtained say over the decision.
Borders wouldn't say what its course of action would be but said it was "not prepared" to say what action it would take to get out of its financial difficulties.
With the exception of the holiday season each, the chain has steadily lost money and hasn't had any immediate signs of recovery without the forced restructuring that would take place in Chapter 11. It has seen readers move away to e-books but hasn't had a leading e-reader option of its own, relying on on the capable but lower-profile Kobo eReader. Barnes & Noble has credited much of its ability to stay alive in retail to the success of the Nook, its self-developed e-reader. Amazon and Apple have done well relative to their respective times in the market but also haven't been tied down by the need to operate retail bookstores, instead focusing exclusively on e-books.