Over the objections of the Creditors Committee, the most contentious issue since the start of the Borders bankruptcy on February 16 was resolved in Borders favor Thursday, with the retailer being given an additional 120 days beyond its original June 16 deadline to file and solicit acceptances for a Chapter 11 plan. In ruling against the committee, Judge Martin Glenn noted that he will file a decision with the order later today or tomorrow.
The hearing was conducted against the backdrop that named the California-based Gores Group as the private equity firm that is interested in acquiring approximately 200 of Borders’s stores for a price the Wall Street Journal said was about $200 million. The Gores Group is described as specializing in investing in distressed properties. Borders attorney Andrew Glenn complained about the Gores offer becoming public. “We’re getting a lot of negative press when anything happens. One of the buyers met with the Creditors Committee and then we see there are news stories in the Wall Street Journal,” he said. Later he stated, “We’re getting slaughtered in the press.” In terms of the sale process, Glenn said that it has become “significantly more robust” and that Borders intends to pursue it vigorously in order to maximize the estate. At this point, he indicated, there are multiple buyers for the retailer, and Borders could file a plan for selling the company in the next two to four weeks, although he did not indicate if there were buyers for the entire company. He added that Borders is still working on drafting a standalone reorganization plan.
Committee attorney Bruce Buechler spoke out and said that the committee was not the source of the leak for this morning’s story about the Gores Group offer.
In making its case for the extension, Buechler said, “[the committee] is not looking to hijack the process. We want to see it come to fruition in the next couple weeks.” He also noted that any potential buyers who have directly approached the committee about Borders were directed to Borders’s financial advisors. To the judge’s question of whether the creditors want Borders to file a plan, Buechler responded, “There’s been a concern from before this case was filed about Mr. {Bennett] LeBow that a plan will be forced on the committee.”
In considering the other motions before the court, Judge Glenn compared the largely blacked out objection by Seattle’s Best Coffee to the rejection of its master lease for Borders’s cafes as going “beyond the pale. I’ve never seen anybody redact their argument about case law,” he said. “This is not Kafka’s The Trial.” Seattle’s Best agreed to making the majority of its motion public and will work with Borders’ attorneys on a revised order acceptable to both parties.
Not every docket item was resolved. An evidentiary hearing is set for June 13 to consider Borders’ motion to assign its lease at Camino Real to TJX subsidiary Homegoods. Among the points of contention are: the cure amounts (a $1,000 water bill and a $26,000 property tax bill) and use and tenant mix at the shopping center
