Borders sale procedures OK'd; $215.1 million bid not stalking horse

By Caroline Salls

Pittsburgh, July 14 - Borders Group, Inc. received court approval of the bid procedures for the proposed sale of substantially all of its assets, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Borders said it will consider going-concern bids, which may include a liquidation of some of its assets, as well as bids to purchase to liquidate assets not subject to going-concern bids, including furniture, fixtures and equipment, intellectual property leases and contracts and bids to purchase to liquidate substantially all of its assets.

The $215.1 million stalking horse bid submitted last month by Direct Brands will no longer serve as the lead bid for the sale, according to an amended agency agreement filed Thursday.

Competing bids are due by 5 p.m. ET on July 17, and the auction will be held on July 19. Borders said it would file a notice on July 18 if no competing bids are received.

The agency agreement with Hilco Merchant Resources, LLC, Gordon Brothers Retail Partners, LLC, SB Capital Group, LLC, Tiger Capital Group, LLC and Great American Group, LLC was originally signed on June 30 and then amended on July 13, according to a court filing.

Under the agency agreement, Borders will receive a guaranteed 72% of the $350 million to $395 million cost value of the merchandise sold in a liquidation.

The agency agreement will take effect if the court does not approve a going-concern sale or if a going-concern buyer fails to close the sale by July 29.

All bids must exceed consideration provided in the agency agreement by at least $1 million and must include at least $215.1 million in cash and an additional $15 million in cash or equivalent consideration.

Bids at auction must be at least $1 million higher than the previous bid.

The sale hearing is scheduled for July 21.

Borders, an Ann Arbor, Mich.-based specialty retailer of books and other educational and entertainment items, filed for bankruptcy on Feb. 16. The Chapter 11 case number is 11-10614.

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