Borders’ $215 million bid from investor Jahm Najafi unraveled yesterday, and a liquidation company now has the lead bid for the company. Sarah Weinman has been filing live dispatches from the bankruptcy hearing this morning for Publishers Lunch. She tweeted more news: “Liquidators bid for Borders is approved by Judge as stalking horse bid. Objections are postponed (and can be filed) until Monday afternoon.”
The Wall Street Journal was blunt about the implication of the news: “The development raises the prospect that Borders will soon close all its remaining 399 stores and go out of business.”
Previously, Najafi had struck a deal as a “stalking horse” bidder for the bankrupt company, basically setting up himself up as the lead in the auction of the bookseller. His company would have assumed $220 million of liabilities along with the sale. According to the WSJ, Borders’ creditors feared that they would lose money in this potential scenario and thought they could collect more money from a liquidation deal for the bookstore chain.
Borders CEO Mike Edwards explained in a letter to employees: “Borders had two alternate options for a Stalking Horse bidder: the Najafi proposal, or a group including Hilco and Gordon Brothers, who would purchase the store assets of the business and undertake an orderly wind-down. Late this afternoon, Najafi informed us that they have decided to withdraw as the stalking horse proposal, and therefore we will submit the Hilco and Gordon Brothers proposal to the Court for the purposes of serving as the Stalking Horse bidder at the auction next week.”
Editor’s Note: This post has been updated as the story evolved.