Earlier today, the US Bankruptcy Court granted Borders an extra 120 days to file its plan for a successful exit from bankruptcy. Judge Martin Glenn granted the request, despite objections filed by the Creditors Committee, which represents the following publishers:
- Perseus Books Group
- Random House
With the extension, Borders has until October 14 to file its plan, instead of the original June 16 date.
While it’s possible that Borders could come out of this stronger than before, I only foresee this as delaying the inevitable. At the moment, Borders is the pariah of the print industry. They’ve delayed payments to publishers, tried to get these companies to treat Borders’s debts as loans, and caused irreparable harm to the greater industry. Stu Levy went on record in April, stating bluntly that the bookstore’s bankruptcy was a huge blow to TOKYOPOP. Specifically, he stated the following:
The facts are simple. Borders, our biggest customer, went bankrupt, owed us a lot money, which they didn’t pay us, and as a result we are in a very challenging situation, and have had to react quickly to the situation.
Frankly, the decision to stay the deadline comes as a bit of a shock. I pretty much assumed this was the last gasp for the retailer. The Creditors Committee is clearly in the right, as Borders has a large number of unpaid liabilities. To figure a way out of this mess in four months seems like an almost impossible task. The irony of the situation is that Borders was a vital force in the popularization of manga in America. Without Borders, the manga industry as we know it wouldn’t exist.
It does appear that, while the company is in critical shape, they are taking steps to keep the lights on. Yesterday, the Detroit News reported that Borders may sell 200 stores to Gores Group LLC for roughly $200 million. In addition, the company plans to launch a touch-screen version of their Kobo, in an effort to spur digital sales. Whether it will all work out remains to be seen. Borders has a lot of debt to recoup, and the creditors are obviously not willing to play favorites at this stage. It will be interesting to see what comes of this situation, though. If Borders can pull through, then I must admit that I will be impressed.