Borders Group may be forced to liquidate itself after a $215 million deal to sell itself to a private-equity investor collapsed overnight.
Borders, the No. 2 U.S. bookstore chain that filed for Chapter 11 bankruptcy protection in February, has designated a group of liquidators as the opening bidders in a bankruptcy-court auction, The Wall Street Journal reported.
A liquidation would mark a dramatic end for Borders, which employs almost 11,000 workers and still has 399 stores across the U.S.
Private-equity investor Jahm Najafis deal to buy Borders for $215 million and the assumption of $220 million of debt fell apart amid complaints from creditors and landlords that his offer would let him liquidate the chain, the Journal reported.
Creditors are in favor of Borders instead selling itself to a group of liquidators for between $252 million and $284 million, the paper reported.
The group of creditors is led by Hilco Merchant Resources and also includes Gordon Brothers Retail Partners, SB Capital Group, Tiger Capital Group and Great American Group, Reuters reported.
Borders succumbed to bankruptcy earlier this year as it continued to lose market share to rival Barnes & Noble (NYSE:BKS) and especially online retailer Amazon.com (NASDAQ:AMZN).