Borders on Verge of Bankruptcy -- Could Fire Thousands
It looks like brick and mortar book stores will be taking a giant step closer to extinction this month, as Borders is expected to declare bankruptcy, close up to 150 stores, and lay off thousands. Most of this is expected to happen before the end of February.
This is not the beginning of Borders' woes. One of the nation's largest book retailers suffered five rounds of layoffs in 2010, and just last month it lost five top executives, including its CIO and general counsel. The chain has already shuttered 200 stores, and it's also planning on releasing an additional 300 employees as it closes its distribution center in Tennessee.
Borders has given no indication of which stores will be closed as part of its Chapter 11 filing. It is generally known, however, that Borders has not been paying its vendors, causing problems for publishers, authors, and printers as well. Borders stock prices have slid below 50 cents as shareholders attempt to sell off their interest, facing the possibility that Chapter 11 reorganization could eliminate the stock's value completely.
Just last week Borders received a commitment for $550 million in credit from GE Capital, contingent upon restructuring. This means Borders has a chance of surviving, but on a much smaller scale.
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