After filing for bankruptcy, closing roughly one-third of its bookstores, and failing to find a buyer, Borders announced yesterday that it plans to liquidate its remaining stores. How exactly is Borders going to get rid of all its stuff?
Liquidation companies and businesses will buy the retail locations; the general public will get to scoop up the rest.
Under the leadership of Hilco Merchant Resources and Gordon Brothers Group, a group of liquidation companies has worked out a proposal for the struggling company. If the bankruptcy court approves the proposal on Thursday (it most likely will, says a Hilco representative), all Borders bookstores will be set up to conduct going-out-of-business sales, which will most likely last 9 to 10 weeks. The liquidators hope to sell to the public all of Borders’ inventory—everything from books to bookshelves—and will steadily drop prices to make sure it all clears out. This tactic is often cheaper than hiring a company to move everything to another location or buyer. (During this process, ownership remains with Borders; the liquidators act as agents.)
It’s unlikely that another business will want to buy Borders’ inventory, because it’s not particularly unique (the wooden shelves are pretty common, for instance). The next company to lease or buy each location will probably want to clear it out completely before starting its own business, even if it’s another bookstore chain. DGM Realty Partners, which is handling all of the franchise’s real estate, will sell off the locations that Borders owns—Hilco says it may buy some, if they prove to be good assets—and close the rest, returning them to their landlords.
Thanks to David Winter and Dennis Connolly of the Bankruptcy Advisory at Alston & Bird and Rick Kaye of Hilco Merchant Resources.
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