Borders Delays Payments To Several Parties To Maintain Liquidity, Bankruptcy Imminent?

We can’t say this one was totally unexpected, Borders has been under pressure for a while now with the exploding e-book market which is currently going bananas powered by Amazon’s Kindle and Barnes and Noble’s Nook. Borders acknowledged yesterday that it will delay payments to certain parties — vendors, landlords and others — scheduled for the end of January. The delay is intended to help the company maintain liquidity while it seeks to complete a refinancing or restructuring of its existing credit facilities and other obligations. Borders has received a conditional commitment from GE Capital, Restructuring Finance for a $550 million senior secured credit facility.

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Borders emphasized that it understands the impact of its decision on the affected parties, but that the company is committed to working with its vendors and other business partners to achieve an outcome that is in the best interest of Borders and these parties for the long-term. Honestly, this isn’t a good sign and I don’t see Borders making it out of 2011 in its current form, it seems another book giant will fall. This kind of action is usually the final precursor to a company filing for bankruptcy. I could see Borders reinventing itself by closing all its brick and mortar stores and becoming a completely online operation kind of like Circuit City did, but I have to admit I don’t know how I would feel about it not being easy to go out and pick up a book from the bookstore when I felt like it. I suppose its the price we pay for convenience and technology, but its still kind of sad.

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