July 11, 2011 – By Nick Brown
NEW YORK (Reuters) - A host of landlords are objecting to the sale process by which Borders Group Inc <BGPIQ.PK> hopes to auction itself out of bankruptcy, saying the proposed plan would effectively keep landlords from advocating for their interests.
In nearly 20 objections filed Friday and Monday in U.S. Bankruptcy Court in Manhattan, landlords said the sale plan gives no information as to which leases will be assumed by potential buyers of Borders' assets.
The plan leaves landlords "in the dark," Glimcher Properties Limited Partnership said in court papers.
The landlords added that the plan gives too little notice for objecting to the fate of leases. The current deadline is Thursday at 4 p.m., just six hours after the sale process is slated to be heard -- and, Borders hopes, approved -- by a court.
The sale "will result in landlords having no idea of whether their leases are part of any going concern package until after their deadline to object to the sale," RREEF Management Co, one of the company's landlords, said in court papers.
"The Bankruptcy Code does not give the carte blanche to eviscerate specific Bankruptcy Code protections for landlords," RREEF said.
The proposed process includes a July 19 auction for Borders' assets, though if no party submits an initial bid by a Sunday deadline, the auction would likely be canceled. In that case, private equity group Najafi Cos, which submitted a minimum or "stalking horse" bid of $215 million in cash and $220 million in assumed liabilities, would become the winning bidder.
The tight time frame has already gotten the attention of Judge Martin Glenn, who oversees Borders' bankruptcy. Glenn questioned the schedule at a June hearing, saying it was possible the bidding procedures would not be finalized in time to accommodate objection deadlines.
A spokeswoman for Borders said the company had no comment. A Borders attorney did not respond to a request for comment.
The sale procedures will go before Judge Glenn for a hearing Thursday at 10 a.m. EDT.
Borders, which helped pioneer the concept of book superstores, filed for bankruptcy in February after years of falling sales. It has already closed 226 of the 642 stores it operated prior to bankruptcy.
The case is In re Borders Group Inc, U.S. Bankruptcy Court, Southern District of New York, No. 11-10614.
(Reporting by Nick Brown)