Judge approves Borders auction

July 15, 2011|By Associated Press

The move by Borders Group came after an offer earlier this month from a private… (JEWEL SAMAD/AFP/Getty…)

NEW YORK - Borders Group, the nation’s second largest book store chain that once operated over 1,000 stores, appears headed for liquidation after a judge yesterday approved its motion to auction itself off with a team of liquidators as its opening bid.

The move came after an offer made earlier this month from a private equity investor disintegrated overnight.

Borders said it will accept bids until 5 p.m. Sunday and will give notice by Monday if no other bidder emerges.

Earlier this month Najafi Cos., a private equity investor from Phoenix, offered $215 million for the company, plus the assumption of $220 million in debt.

But on Wednesday, creditors objected, saying the agreement would not prevent Najafi from taking possession of the company and liquidating it immediately for profit. Landlords also objected.

Creditors said a bid from liquidators Hilco Merchant Resources and Gordon Brothers is stronger. They believe it would pay out between $252 million and $284 million in cash. Creditors said in a court filing they were hopeful Najafi would submit a higher bid.

Yesterday, Borders said it wouldn’t seek approval for Najafi’s bid at a scheduled hearing in the Bankruptcy Court Southern District of New York and designated the liquidators as the primary, or “stalking horse’’ bid.