Borders filed for Chapter 11 bankruptcy today in New York. The company announced that it would close 30% of its “underperforming” stores. Papers also indicated that the company had liabilities of $1.29 billion and assets of $1.28 billion. The largest publisher creditors were: Penguin Books with $41,000,000 owed, Hachette Book Group with $36,000,000, Simon and Schuster with $33,000,000 and Random House also with $33,000,000.
For months now most people in book publishing have been expecting this to happen. At the end of December Borders announced that they would not be paying any of their suppliers for the month and again failed to pay at the end of January.
Filing for Chapter 11 bankruptcy does not mean the end of Borders. It allows for a structured reorganization of the company that will seek to allow them to shed expenses, such as unprofitable stores, and protects them from creditors until they can get on their feet again. Often businesses that go into Chapter 11 bankruptcy later file for liquidation.