• 16
  • February
    2011

Borders Group Inc. filed for Chapter 11 protection on Wednesday. The bookstore chain has been struggling financially for some time and made the decision to restructure its finances by filing for Chapter 11 bankruptcy. Borders said that due to the poor economy and low consumer spending, it needs to restructure in order to reduce debt and save the company.

According to The Wall Street Journal, Borders has secured a loan from GE Capital for $505 million to cover its operation costs while in Chapter 11. The bankruptcy court will have to approve the loan.

Borders will work on reorganizing the operations of its company and securing new financing. The company also announced that it will close 30 percent of its stores across the country in the next few weeks. Borders' plan is to strategically close stores that are underperforming. According to the WSJ, the company has 644 stores in 48 states, Washington, D.C., and Puerto Rico.

As reported in a previous post, Borders was attempting to avoid a bankruptcy filing, but ultimately decided that it was the best option to get the company back on its feet. Also discussed in previous posts is how "brick-and-mortar" stores have struggled to compete and stay viable with the advent of online retailers.

Blockbuster filed for bankruptcy after struggling to compete with Netflix. Barnes & Noble and Borders have struggled to compete with Amazon.com, though Barnes & Noble has been quicker to compete with Amazon, by building its own website and developing the Nook to compete with Amazon's e-reader, Kindle.

Source:

Borders Files for Chapter 11 Bankruptcy Protection (The Wall Street Journal)