Chapter 11 for Borders, New Chapter for Books

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I used to hang out at Borders a lot especially at their now shuttered North Michigan Avenue location. That store was so large and vast and then suddenly there were having a liquidation sale. All items must go because the store is closing. Now all I have is the smaller State Street location across from old Marshall Field's (err Macy's).

From WSJ via Instapundit:

The troubled Ann Arbor, Mich., bookseller could file for Chapter 11 bankruptcy-protection as soon as Monday or Tuesday, paving the way for hundreds of store closings and thousands of job losses, said people familiar with the matter.

Borders has abandoned efforts to refinance its debts, and is preparing bankruptcy papers and seeking financing agreements that would keep it operating during the Chapter 11 restructuring process, the people said. Its shares tumbled 33% to 25 cents apiece in 4 p.m. New York Stock Exchange trading after The Wall Street Journal reported its plans.

"Borders is not prepared at this time to report on the course of action it will pursue," Borders said in a statement.

Borders's finances crumbled amid declining interest in bricks-and-mortar booksellers, a broad cultural trend for which it offered no answers. The bookseller suffered a series of management gaffes, piled up unsustainable debts and failed to cultivate a meaningful presence on the Internet or in increasingly popular digital e-readers.

Its online struggles proved critical as consumers became accustomed to getting books mailed to their doorsteps or downloaded to handheld electronic devices. Among Borders's biggest missteps were decisions to transfer its Internet operations to Amazon.com Inc. about a decade ago, and a stock-buyback program coupled with overseas expansion that swelled the company's debt.

Now, Borders is preparing for a costly and time-consuming trip through bankruptcy court, where it will seek to close about a third of its 674 Borders and Waldenbooks stores, the people familiar with the matter said. Borders also would cut swathes of its 19,500 staff as it attempts to reinvent itself to compete with Amazon and its hot-selling Kindle reader, and Barnes & Noble Inc., the nation's largest bookstore chain and maker of the Nook e-reader.

Whether it can restructure and emerge as a stand-alone company is unclear. Many Wall Street bankers and lawyers who have studied the chain believe it may not be able to avoid liquidation. It is expected to report more than $1 billion in liabilities in its bankruptcy petition, said a person familiar with the matter.

Drove by the Hyde Park Borders store within the last two weeks and found that store is going to close and they're holding a big sale. So there are some issues there, and I can only hope that another bookstore would replace that one. But note that Hyde Park is also known for used bookstores as well.