This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Borders Files for Bankruptcy

NEW YORK ( TheStreet) - Borders (BGP) filed for bankruptcy protection Wednesday morning, with plans to close one-third of its stores.

"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 and which are essential for it to move forward with its business strategy to reposition itself successfully for the long term," the company said in a statement Wednesday.

>>The Borders Story: Is This the Final Chapter

Borders said it has received commitments for $505 million in debtor-in-possession financing led by GE Capital to allow it to continue to operate its stores and pay employees while in bankruptcy. It plans to close about 30% of its store base over the next several weeks.

As of Dec. 25, Borders had liabilities of $1.29 billion and assets of $1.28 billion, according to documents filed with U.S. Bankruptcy Court in Manhattan.

The company previously said it would receive a conditional loan commitment from GE Capital of $550 million. But Borders failed to meet those conditions, which included arranging financings with other lenders, vendors and landlords.

Borders has delayed payments to vendors, landlords and other parties in both December and January in an effort to preserve liquidity.

Borders received a delisting notice from the New York Stock Exchange a week ago, warning that its stock has been trading under $1 for 30 consecutive days. NYSE requires that stocks maintain an average closing price of $1.

In early December, hedge fund manager Bill Ackman, whose Pershing Square Capital Management owns securities representing a 41.8% stake in Borders, offered to finance an acquisition by the company of rival Barnes & Noble (BKS). The cash-and-stock deal envisioned then would have valued Barnes & Noble common shares at $16 each, but it never seemed to get off the ground.

--Written by Jeanine Poggi in New York.



>To contact the writer of this article, click here: Jeanine Poggi.

>To follow the writer on Twitter, go to http://twitter.com/jpoggi.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs