According to the Wall Street Journal, about half of the remaining Borders stores may be kept open and purchased by private-equity firm Gores Group. Borders filed for Chapter 11 bankruptcy protection in February, and has been soliciting offers for the company amid mounting losses and tense discussions with publishers which supply books.
Gores is known as a distressed investor, scooping up stakes in ailing companies and trying to rehabilitate them. Alec Gores and his brother Tom recently bought Alliance Entertainment, which distributes DVDs, CDs and video games to stores such as Barnes & Noble, Amazon and Target.
The Los Angeles Times reported that the Gores duo has ambitions to assemble an entertainment conglomerate. They have looked at buying at least three Hollywood movie studios, including Miramax. In 2008, Gores also put about $100 million into radio programming company Westwood One. Gores Group also has investments in telecommunications, women’s clothing and healthcare.
The Gores brothers are a powerhouse. Brother Tom heads another private-equity firm, Platinum Equity. Sam Gores leads Hollywood talent agency, Paradigm. Sam has acted as a consultant for his brothers’ forays into the entertainment business.
Forbes says Alec Gores’s net worth is $1.6 billion, ranking him No. 782 on Forbes list of the world’s richest people.
Borders is the second-largest bookstore chain in the U.S. (after B&N), and once had about 1,000 stores. It started in 1971 as a single store, operated by brothers Louis and Tom Borders while they were students at the University of Michigan. The store count is now about 400.
According to the Detroit News, today a bankruptcy judge will considers Borders' request for more time to craft a turnaround plan. It wants four more months, until October, to put together a plan to exit Chapter 11 bankruptcy.
A committee of unsecured creditors -- publishers and other companies that Borders owes money to -- filed an objection to the request, saying the retailer is still losing too much money and hasn't shown cause for an extension. The committee says it should be allowed to recommend its own liquidation proposal — even if the judge gives Borders more time to develop a plan without outside interference.
If the judge rejects Borders' request, it has until June 16 to submit a turnaround plan. Publishers are disturbed about the prospect of losing Borders. John Pottow, a bankruptcy law expert at the University of Michigan Law School, said the Borders bankruptcy has been "unusually antagonistic," with creditors rejecting most of Borders' proposals and indicating they'd prefer liquidation.
"It sounds to me like they're jockeying for control," Pottow said. The committee's request to end Borders' exclusivity period for filing a plan is an aggressive move, he said.
Borders executives are confident they are on the right path. "Borders continues to make good progress in positioning the business for sustainable growth and profitability." Chief Executive Officer Mike Edwards said Tuesday.
The company points to achievements like significant savings from cost-reduction moves, improved sales in its children's section and the growth of its Borders Rewards program. Borders continues to lose money — more than $180 million between Feb. 16, when it filed for Chapter 11 protection, and April 30 — despite closing more than 200 stores and other cost-cutting moves.
Borders continues to forge ahead on the digital book front, announcing last week the launch of a touch-based e-reader from Kobo for $129. Borders also said it would drop the price of its original Kobo to $99, a price point many analysts say is impulse-buy territory.