Borders Group Inc. filed for Chapter 11 bankruptcy protection last February. As noted in previous posts, certain "bricks-and-mortar" stores have struggled to keep up with their online competitors, such as Blockbuster, which filed for bankruptcy after struggling to compete with Netflix. The second-largest book chain has struggled to keep up with the pace of new technology and with its competitors that have adapted more successfully.
Barnes & Noble, the largest book chain, has also struggled to compete with online book sales from such companies as Amazon.com, but was much quicker than Borders to create its own website and e-book reader, the Nook. Borders originally made the mistake of using Amazon to run its website, which ended up just helping Amazon to compete against Borders. After filing for Chapter 11 bankruptcy in February, Borders is working on closing about a third of its stores across the U.S., or around 225 stores, according to Bloomberg Businessweek.
Borders' bankruptcy case experienced a setback Friday. According to Bloomberg Businessweek, on Friday, the U.S. Trustee said that it should be denied requests to pay the attorneys and professionals working on its case.
The U.S. Trustee is a bankruptcy watchdog for the Justice Department. The U.S. Trustee said that Borders has not proved that it can pay for its bankruptcy case costs because it has failed to file a financial report with the bankruptcy court. Borders also owes fees to the U.S. Trustee that it has not yet paid. Since Borders has not demonstrated that it can pay other fees associated with its bankruptcy case, the U.S. Trustee said that it should not be granted its requests to pay the professionals working on its bankruptcy case.
Borders Hasn't Shown It Can Pay for Bankruptcy, U.S. Says (Bloomberg Businessweek)
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