Mega book retailer Borders Group, Inc. commenced a chapter 11 bankruptcy case today in the United States Bankruptcy Court for the Southern District of New York (Case No. 11-10614). The company disclosed $1.29 billion in debt and $1.27 billion in assets. Borders owes $41.1 million to Penguin Group , $36.9 million to Hachette Book Group and $33.8 million to Simon & Schuster, all of which are book publishers. Prior to filing, Borders secured $505 million in financing from GE Capital and other sources to assist in the reorganization.
Borders cited reduced customer spending and lack of liquidity among the reasons for filing chapter 11. Borders President Mike Edwards said the company "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." Borders plans to close approximately 200 of its 642 stores, 35 of which are in California, and lay off about 6,000 of its 19,000 employees. Copies of the bankruptcy petition and first day motions can be found here. - Reno Fernandez
Lockyer Rejects State Bankruptcy for California
We previously posted a short article on a Republican proposal to allow states to file bankruptcy. Bill Lockyer, California's state treasurer, has rejected the idea, arguing that bankruptcy is for individuals, companies and municipalities that cannot raise their revenue, whereas states are entitled to raise taxes. Sacramento Bee columnist Dan Walters has commented that California's $20 billion deficit is only 1% of its economic output. - Reno Fernandez
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