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Borders files Chapter 11; Federal Way store stays open
From staff reports:
On Feb. 16, Borders Group Inc. filed for Chapter 11 protection under the Bankruptcy Code.
The Ann Arbor, Mich., book retailer intends to reorganize the company and continue business in the long term.
Borders is blaming the economy, decreased customer spending and the changing ways in which Americans access reading materials on its need to file Chapter 11, according to a Feb. 16 press release.
Among other measures, and subject to court approval, Borders plans to close approximately 30 percent of its stores nationwide in the next several weeks. According to the release, the closings are a reflection of economic conditions, cost structures and viability of locations, among other factors.
According to the Wall Street Journal, Washington Borders stores in Gig Harbor and Lynnwood are scheduled to close. Federal Way’s Borders Books and Music, located at The Commons Mall, was not listed as among the stores closing.
The retailer plans to use $505 million in financing from GE Capital to reorganize its business model and reposition itself in the market in a way that will address the changing needs of readers, according to the release.
“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. 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,” said Borders Group President Mike Edwards in the release.
Borders will continue to operate in a normal fashion for now. It will honor its Borders Rewards program, gift cards and other customer programs. Additionally, the company expects to make employee payroll and continue its employee benefits programs, according to the press release.