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Last-minute bid may save some Borders stores

NEW YORK -- A bankruptcy judge on Thursday approved Borders Group's plan to sell off its assets via a group of liquidators in what could be the final nail in the coffin for the 40-year-old chain.

Judge Martin Glenn of the U.S. Bankruptcy Court of the Southern District of New York approved Borders' plan to appoint liquidators led by Hilco Merchant Resources and Gordon Brothers Group to sell off its assets. Going-out-of-business sales were set to begin at some stores Friday.

The move had been expected since the Ann Arbor, Michigan-based bookseller's attempt to stay in business unraveled quickly last week, after a $215 million "white knight" bid by private-equity company Najafi Cos. collapsed under objections from creditors and lenders. They argued the chain would be worth more if it liquidated immediately.

There was a small reprieve: About 30 to 35 of Borders remaining 399 stores could be sold to rival chain Books-a-Million Inc. The two companies are still in talks, but if that deal happens, it could save about 1,500 of Borders' remaining 10,700 jobs, said Borders lawyer Andrew Glenn.

At its peak, in 2003, Borders operated 1,249 Borders and Waldenbooks, but filed for bankruptcy protection in February, when it shrunk to 642 stores and 19,500 employees. Since then, Borders has shuttered more stores and laid off thousands.

Borders had hoped to emerge from bankruptcy by the fall as a smaller and more profitable company, but pressure from creditors and lenders eventually led the chain to seek approval to liquidate.

Joe Gable worked at Borders books for 34 years until he was laid off in 2008. By then, he told CBS News, the writing was on the wall.

"It was just a downward spiral," he says. "I saw the train wreck coming years ago."

He and others blame Borders' demise on inept management, a taste for too much expansion, a strict focus on the bottom line, and a foot-dragging approach to the digital age, reports CBS News Correspondent Dean Reynolds.

Borders' main competitor, Barnes and Noble, was quick to come out with its Nook e-reader and now, for every hardcover book that's purchased at Barnes and Noble, three digital versions are sold.

Customers know about Nook, as well as Amazon's Kindle. But Borders was generally missing in e-reader action.

For the record - theirs was called Kobo.

"Their reaction to the changing economic conditions has been less than perfect," observes Nejat Seyhun, a University of Michigan corporate finance professor. "I'm not sure I'd use the word victim, but they were certainly affected by both changing technology and changing taste."

Company executives declined interview requests from CBS News, but issued a statement, saying, "We were all working towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, e-reader revolution and turbulent economy have brought us to where we are now."

In Ann Arbor, independent book seller Nicola Rooney isn't happy a competitor is closing. "It's bad for the book business," she says. "It gives people a sort of image that it's dying, which it's not, by any means."

But for Borders - or at least, most of the chain, there will be no storybook ending.

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