Speaking of learning!
In case you didn't hear and/or do not follow me on the Twitters, Borders Group is set to declare bankruptcy this week. What does that mean for the publishing industry and you, authors/consumers?
It can mean one of two things, depending on what bankruptcy paperwork is filed.
Under Chapter 7, Borders would essentially undergo liquidation. A trustee is appointed to figure out how best to disburse and redistribute assets and property to creditors (the people to whom the business owed all that money). Once the process is over, the business is no more. Kaput. Gone.
Because I have no insider knowledge of the situation (and couldn't share it with you even if I did), I can't really sketch out the details of Borders' case for you, nor can I describe what a potential liquidation for them would look like. All I can tell you is: it's the least desirable option from the industry's perspective.
In the event of Borders' complete dissolution, a lot of their former business would redistribute to other retailers (Barnes & Noble, Amazon, independent bookstores), but a certain fraction would just be lost.
Under Chapter 11, however, no trustee would be appointed on Borders' behalf, and they would continue under their own steam as "debtors in possession." A Chapter 11 filing would enable them to reorganize the company while under the protection (and supervision) of the court, which may include (but is not limited to) securing new financing/lines of credit and shedding underperforming stores or departments.
They would also benefit from what's known as an "automatic stay," meaning that creditors would be unable to collect from Borders during the term of their restructuring.
Borders could potentially continue operations largely unhindered and then emerge from bankruptcy in a few months or years (Kmart did this about ten years ago), and while their current stock would (as in a Chapter 7 filing) basically be rendered valueless, they could begin trading on the NYSE again under a new listing if and when they officially emerge. Sort of like a phoenix emerging from the ashes, only with a major brick-and-mortar chain bookstore instead of a bird and a pile of debt instead of cinders.
In short: bankruptcy isn't necessarily the end of Borders. There still remains a lot to be seen.
It will be most interesting to see how this one plays out.
ReplyDeleteI can see the effects of the bankruptcy upon the industry as a whole, but how will this affect individual authors, if at all?
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI hope it works out. I was in a Borders last week for an author reading and signing and I heard some of the workers say, "At least the lights are still on."
ReplyDeleteIt's so sad.
Thanks for explaining the difference between Chapter 7 and Chapter 11. I suppose the latter is what we should hope for, and hope Borders can pull a K-mart so there are at least two major chains in the U.S. Of course, it'd be great to see more independent bookstores as well. Competition in general is good.
ReplyDeleteThanks for the shout out!
ReplyDeleteAnd I'm really sad about Borders... in my city, that one was closest and coolest. I hope they'll go with Chapter 11 so it can stay open.
Yikes! As one who has her first book coming out soon, this is scary.
ReplyDeleteFantastic news, and very well done!bilgibank
ReplyDelete