As expected, Borders, one of the U.S.’s only two nationwide bookstore chains, filed for Chapter 11 bankruptcy today. It plans to close about 200 stores (roughly 30% of the total), including almost half its 30 Chicago-area stores and three of its five Manhattan locations. Borders, which employs about 6,100 full-time workers, owes the six largest book publishers combined about $182 million; one publisher told the Wall Street Journal, “If publishers are lucky, they’ll get back 25 cents on the dollar.”
However, the company has received a promise of over $500 million in reorganization financing from a group led by GE Capital, to give it breathing room to restructure.
In the near term the news is probably good for rival Barnes & Noble, which may take over some Borders stock and locations. But the brick-and-mortal bookstore business has been declining for years.
Barnes & Noble has been trying out new marketing strategies in an effort to stave off Borders’ fate, such as a gift card deal with Groupon, and its new Nook Color e-reader has been receiving some positive reviews. Still, many industry observers predict a continuing steep decline in the large-scale bookstore business.Powered by Sidelines