One week after Borders Group filed a motion to extend the exclusivity period for filing and soliciting acceptances for a Chapter 11 plan, the Creditors Committee filed an objection. In it, they note that they are “gravely concerned” that an extension could be detrimental to general unsecured creditors. If granted, the extension would give the retailer an additional 120 days from the June 16 deadline to file a plan.
Borders, notes the Committee, “have reported losses at an alarming rate—the Debtors’ monthly operating reports for the period from the Petition Date ... to April 30, 2011, a mere 2.5 months, shows in excess of a $180 million loss.” The Committee also points out that to date there has been neither a stalking horse bidder or a draft plan. If the judge were to grant Borders an extension, the Committee asks that the motion be modified to allow the Committee to pursue its own plan, something that it hasn’t done to date. They also say that if Borders were to file a plan now, they would be unlikely to support it.
In addition, the Committee asks that the motion be denied because Borders hasn’t shown cause and its losses are “admittedly accumulating on a daily basis without any end in sight.” They say that it is unlikely that Borders will be able to craft a plan and that the assets will be sold to one or more buyers in the next 30 to 60 days. The commuttee also cited a lack of co-operation, noting that their request for a preliminary draft of Borders’s exit strategy was turned down.
In other filings, Seattle’s Best Coffee objected to a motion filed by Borders to reject its master licensing agreement with the company. In a motion, and supporting declaration, that are mostly blacked out to protect SBC’s intellectual property, it notes that the motion glosses over the issue of protecting SBC’s trade secrets and would allow Borders “to infringe SBC’s trademarks for 45 days post-rejection, and by omission, other SBC rights indefinitely.”
