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Borders 'close to administration' Borders goes into administration
(about 7 hours later)
The Borders bookshop chain in the UK is on the verge of going into administration. The Borders bookshop chain in the UK has gone into administration.
It has filed court documents stating its intention to appoint accountancy firm BDO as administrator. Administrators MCR said all 45 Borders and Books Etc stores would remain open while it sought a buyer for all or some of the outlets.
However, BDO subsequently said it could not be made administrator due to a conflict of interests. Borders has suffered from increased competition from online retailers and supermarkets, and its website recently stopped taking new book orders.
Borders, which has 45 stores in the UK, has suffered from increased competition from online retailers, such as Amazon, as well as supermarkets. MCR said Borders had "severe cash flow pressures" and that several suppliers had stopped or reduced its credit.
Its website has stopped taking orders for new books while it "is in discussion with potential buyers". A number of credit insurers had also reduced their cover to Borders, which made suppliers less willing to trade with the retailer and made it difficult for it to replenish its stock levels.
Waterstones owner HMV is thought to be one of the firms in discussions to buy some of the chain's stores, while WH Smith is reported to have walked away from a takeover deal on Friday. 'Wages paid'
The Borders chain was originally owned by the US book giant of the same name but was sold in June 2007 to Risk Capital Partners, which is headed by Channel 4 chairman Luke Johnson. "All outstanding employee wages have been paid up to date and ongoing wages for retained staff will continue to be paid as an expense of the administration, said Phil Duffy, of MCR, a business turnaround specialist.
MCR is also now conducting a review of the Borders business, which employs 1,150 people.
It is therefore clear that trade credit insurers played no part its downfall - withdrawal of trade credit insurance is a symptom of a business in jeopardy, not a cause of its demise Marc Henstridge, trade credit insurer Atradius
Waterstones owner HMV has refused to comment on recent reports it is interested in buying some of the Borders shops.
From The Bookseller trade mag website - I can't get hold of the Publishers Association. But Graeme Neill obviously has a hotline
Simon Juden, chief executive of the Publishers Association, which represents the book industry, told the Bookseller trade magazine that it was "urgently" considering the situation.
The Borders chain was originally owned by the US book giant of the same name, but was sold in June 2007 to Risk Capital Partners, which is headed by Channel 4 chairman Luke Johnson.
Risk Capital then sold it on to the private equity firm Valco earlier this year.Risk Capital then sold it on to the private equity firm Valco earlier this year.
Marc Henstridge, head of risk for UK and Ireland at leading trade credit insurer Atradius, said his industry was not to blame for Borders' woes.
"In the case of Borders, the management team were made fully aware of the lack of trade credit insurance prior to the management buyout earlier this year," he said.
"It is therefore clear that trade credit insurers played no part its downfall - withdrawal of trade credit insurance is a symptom of a business in jeopardy, not a cause of its demise."
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