Dedham Borders Safe Following Company Bankruptcy Announcement

Borders Group, Inc., the corporation behind Borders Books & Music, the national chain of books, movies and music stores, announced today that it has filed for reorganization relief under Chapter 11 bankruptcy. Part of the reorganization includes closing six Massachusetts Borders locations, but not the location that opened in the summer of 2010.

In total the company announced it will close 200 “underperforming” locations, approximately 30 percent of the company’s national store network. Closing are expected to occur within the next two months and be complete by the end of April.

“It has become increasingly clear that in light of the environment of curtailed customer spending, our ongoing discussions with publishers and other vendor related parties, and the company’s lack of liquidity, Borders Group does not have the capital resources it needs to be a viable competitor and which are essential for it to move forward with its business strategy to reposition itself successfully for the long term,” Borders Group President Mike Ewards said in a statement. “This decisive action will give Borders the opportunity to achieve a proper infusion of capital in order to have the opportunity to have the time to reorganize in order to reposition itself to be a successful business for the long term.”

Borders Group stated it has received commitments for $505 million in Debtor-in-Possession financing led by GE Capital, Restructuring Finance.

“This financing should enable Borders to meet its obligations going forward so that our stores continue to be competitive for customers in terms of goods, services and the shopping experience,” Edwards said. “It also affords Borders the opportunity to move forward in implementing the appropriate business strategy designed to reposition Borders to be a potentially vibrant, national retailer of books and other products.”

“We are very pleased to be able to make this commitment to Borders as support for their plan to reorganize the company," said Tim Tobin, Managing Director, Retail Restructuring, GE Capital, Restructuring Finance.

The company assured customers that despite filing for Chapter 11, it will continue to honor its obligations, including its Borders Reward program, gift cards and other customer programs. The company also expects to make employee payroll and continue its benefits program for employees. The release further states that Borders will continue to have a strong national presence with physical store locations and its website.

Finally, Borders Group made it clear in the statement that the store closings are a response to poor economic conditions and not a reflection on members of its workforce.

The Chapter 11 petition for relief was filed in the U.S. Bankruptcy Court, Southern District of New York. Completion of the company’s DIP financing arrangements is subject to approval of the Bankruptcy Court and the satisfaction of certain conditions provided in the financing commitments received by the company from the lenders providing such financing, the release states.