Judge says Books-A-Million can take over 14 Borders leases — Wall Street Journal

By JOSEPH CHECKLER
Wall Street Journal
August 29, 2011

NEW YORK—A judge on Monday cleared Books-A-Million Inc. to take over the leases on 14 Borders Group Inc. stores, meaning at least some Borders stores will carry on as the rest of the chain winds down through liquidations.

Judge Martin Glenn of U.S. Bankruptcy Court in Manhattan approved the deal after Borders settled some objections prior to the hearing, including ones over money that Books-A-Million must pay landlords for the leases.

“I’m glad that everyone was able to work out the objections,” Judge Glenn said.

Books-A-Million has been trying to take over some Borders stores since the auction of the company fell apart in July, and it finally made a deal with Borders last week for a scattered collection of larger Borders “superstores” as well as smaller locations, according to court filings.

Most of the 14 leases being assumed by Birmingham, Ala.-based Books-A-Million are for stores located in the eastern U.S. Books-A-Million has 230 stores in 23 states and Washington D.C., with a strong presence on the East Coast.

The company expects to take over the leases by Sept. 20, a Borders lawyer said. A spokesman for Books-A-Million didn’t immediately respond to a request for comment.

Last month, Judge Glenn approved the liquidation of Borders’s 399 remaining stores, days after talks with private-equity company Najafi Cos. fell apart. Borders then tried to sell between 30 and 35 of those stores to Books-A-Million, but that deal also fell through. Borders continued to seek a deal on some of the stores and eventually ended up with the scaled-down Books-A-Million transaction.

The liquidation of the other stores is expected to be over by the end of September.

Borders, of Ann Arbor, Mich., filed for Chapter 11 bankruptcy protection in February after struggling with increasing competition for its products and the growing prevalence of electronic books. The company, founded in 1971, once had more than 1,200 Borders and Waldenbooks stores. It had 642 when it filed for bankruptcy and began closing more stores in earnest after the filing.

When Judge Glenn approved the company’s liquidation last month, Borders had about 10,700 part-time and full-time employees.

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