Borders Finally Goes Belly Up
Yesterday it was announced that Borders will be bought by what's known as a 'stalking horse' towards the end of July. A 'stalking horse' is an initial bidder for a company in bankruptcy. The sale will end the saga of a company that owned over 500 stores in the US alone (international stores were located in the UK, Ireland, Australia, New Zealand, Singapore, and Puerto Rico) and employed over 19,000 people.
Borders Bookstore started out in Ann Arbor, Michigan in 1971. In 1992 Kmart acquired Borders and Waldenbooks. Just three short years later, Borders absorbed Waldenbooks and was back on its own. Through 2001-2006 the bookstore tried to team up with other players, including Amazon and T-mobile to keep the company moving forward.
The fiscal trouble started in 2007. From that year on, Borders operated in the red and borrowed heavily at a high interest rate to stay afloat. After ending it's marketing alliance with Amazon in 2008, it embraced the self-publishing trend by partnering with Lulu Press that same year. Plus, it reached out to eReader fans by adopting the Kobo platform. In a tell-tale sign that their may be trouble ahead, the company also tried to sell itself, but failed to find a bidder.
In 2009, things started to look up with another change in management, an extension on the loan at a lower interest rate, a series of layoffs by closing 182 stores and new promotional deals with publishers. These efforts at turning the company around contributed to an upswing in their stock price to $2.00.
However, in December 2010, the company was in serious trouble with sales down significantly from the year before. Payments to publishers were delayed. In February 2011, Borders filed Chapter 11 bankruptcy protection and the international franchise was no more.Continued on the next page