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Filing For Bankruptcy, Borders Hits Troubled Times

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Filing For Bankruptcy, Borders Hits Troubled Times


Filing For Bankruptcy, Borders Hits Troubled Times

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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A: Random House, HarperCollins, Penguin, Simon and Schuster, just to name a few. And though Borders got enough financing to see it through the reorganization process, its future remains unclear.

NPR's Lynn Neary has our story.

LYNN NEARY: Just a few hours after the news first broke, Dan Scholz was shopping at his local Borders in Washington, D.C. As he left the store, Scholz said he was upset to hear about the Borders bankruptcy, even though he often shops at one of the competitors that brought the superstore down.

DAN SCHOLZ: You know, I use a lot for book shopping, but it's nice to have a place to browse and look at - actually look at books that you can touch, taste and smell.

NEARY: Matthew Katzenberger also shops for books online and said he wasn't surprised about Borders' predicament.

MATTHEW KATZENBERGER: I always feel sort of depressed when I go into a bookstore because I can't imagine how they can keep going, you know, paying for rent selling books besides - I have mixed feelings about it, too.

NEARY: Some 200 Border stores around the country are scheduled to close. James McQuivey, an analyst with Forrester Research, says he's surprised the news wasn't even worse.

JAMES MCQUIVEY: You know, I really thought there was a strong possibility of liquidation here, that we'd pull a Circuit City, you might say, and suddenly announce that everything's on sale, including the carpet.

NEARY: The company has received $550 million in restructuring finance from a group of investors led by GE Capital.

DAN RAFF: GE Capital's nobody's fault.

NEARY: Dan Raff is an associate professor of management and finance at the Wharton School of the University of Pennsylvania. He says GE Capital must have some faith that Borders can turn things around.

RAFF: The investors in this reorganization have access to more information than people in the ordinary public and one has to imagine that they looked very hard at the question of what the near-term prospects were and whether they were going to get their money back. The longer-term prospects for physical book retailing are quite obscure.

NEARY: The financing, says Raff, will give Borders some breathing room to consolidate and restructure, but the company still has to deal with challenges from digital books and online retailing. James McQuivey says closing 30 percent of its stores may not be enough to save Borders.

MCQUIVEY: You go back 10 years and think of the list of companies that used to sell CDs and DVDs and it included Tower Records and these companies are all gone completely, they're not just smaller. There's no reason to expect that the book business won't have a similar fate. And so it's difficult to see where any optimism is coming from unless you have a really, really dramatic shift in mind.

NEARY: But Borders is expressing optimism, saying with reorganization, it still has the potential to be, quote, "a vibrant national retailer of books and other products."

Lynn Neary, NPR News, Washington.

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