By The Associated Press
Borders Group Inc. filed for Chapter 11 bankruptcy protection this morning after five years of turnaround efforts failed to return the Ann Arbor-based bookseller to health.
The nation’s second-largest bookseller said it would close 30% of its stores, or about 200, in the coming weeks. There are 32 stores in Michigan, and of them, four locations are slated to close: Utica, Grosse Pointe, the Ann Arbor Washtenaw Street store and Dearborn.
The company said it was notifying employees at these stores about the closures today.
In addition, Borders said in its bankruptcy filing that it may close an additional 75 to 136 stores on top of the 194 announced today.
It received $505 million in debtor in possession financing lead by GE Capital, Borders said in the filing in the U.S. Bankruptcy Court, Southern District of New York. That was the same court that handled the fast-track bankruptcies for General Motors and Chrysler.
Borders listed $1.27 billion in assets and $1.29 billion in liabilities in its Chapter 11 filing. It has fewer than 50 creditors, mostly publishers. The top creditor is Penguin Putnam, which is owed $41.1 million.
It also said it appointed Ken Hiltz, the managing partner of Southfield-based turnaround firm AlixPartners, as Borders Group senior vice president – restructuring of the company.
“We are confident that with the protection afforded under Chapter 11 and with the support of employees, publishers, suppliers and creditors and the reading public, a successful reorganization can be achieved enabling Borders to emerge from the process as a stronger and more vibrant book seller,” said Mike Edwards, Borders Group president, in a statement.
Borders ended its bankruptcy avoidance effort with round-the-clock efforts to work out survival deals with lenders and vendors.
The filing, rumored for weeks, comes just three weeks after a $550-million financing commitment with GE Capital was announced.