Borders Going Bankrupt Photos
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Battered by competition from Internet retailers and burdened with too much debt, Borders Group Inc. filed for Chapter 11 protection Wednesday with plans to close about 30% of its stores and emerge with a new focus on e-books and non-book products.
The operator of Borders and Waldenbooks stores blamed lower consumer spending and fierce competition. Whether it can emerge as a stand-alone company will depend in large part on its ability to operate its stores more efficiently while growing Borders.com and making itself a destination for e-books, the fastest growing segment of the book-publishing business.
While in Chapter 11, Borders plans to close about 200 of its 642 stores it “cannot afford to keep.” It had already closed hundreds of locations in the past few years. In 2005, it operated 1,329 stores. Rival Barnes & Noble Inc. today operates 717 bookstores in 50 states.
Brick-and-mortar booksellers like Borders, second in revenue to Barnes & Noble, have been pummeled by Internet-only retailers such as Amazon.com Inc. and the advent of digital books. Last year, the e-bookselling space became even more intense as Apple Inc. and Google Inc. entered the fray.
The Chapter 11 filing will allow Borders, which employs 17,500 people, to access new capital and reorganize its operations. The Ann Arbor, Mich., company has lined up a $505 million loan from GE Capital to fund its operations while in bankruptcy.
By JOSEPH CHECKLER And JEFFREY A. TRACHTENBERG
Read about the bankruptcy here.