Tuesday, March 15, 2011
Bankrupt Borders Group Begs Landlords for Rent Relief
Borders Group, operator of thousands of Waldenbooks and Borders bookstores nationwide, appears before a Manhattan federal bankruptcy judge today to request more time for renegotiating lease arrangements. Borders Group filed for Chapter 11 bankruptcy February 16th of this year, hurt by stiff competition from Wal-Mart and Amazon.com.
Now, Borders Group must renegotiate more than 600 store leases, using plans to close 75 stores as leverage to seek concessions from landlords. A group of these landlords has filed an objection in US bankruptcy court to Borders’ request.
The landlords complain that Borders has not explained why it needs an extension, but are not generally opposed to negotiating with the bookseller as they have a substantial stake in the stores’ success. Under Chapter 11 bankruptcy law, debtors are granted 120 days to restructure these types of contracts, but 90-day extensions are common.
If Borders’ petition is approved, the company would have up to a September 14th deadline to renegotiate its leases. Borders Group also plans to request additional 120-day extensions from individual landlords.
The New York Stock Exchange froze trading of Borders Group (BGP) shares after its February bankruptcy filing and announced plans Wednesday (3/9) to remove Borders Group stock from its listings on the 21st of March.