Whether Borders moves forward as a chain of 200 or so stores or is liquidated could come down to the same issue the current Borders’s management and publishers could never agree upon—terms. According to sources, Najafi CEO Jahm Najafi is looking for publishers to return to at least doing business with Borders on regular payment terms, something publishers appear wary to commit to at this point. Ever since Borders withheld payment in December, the major houses have shipped to the chain on a cash basis only, despite pleas from CEO Mike Edwards that the houses return to a regular payment schedule.
It isn’t clear what Najafi might do if he can’t get the publishers to agree to regular terms. Mostl likely he will move ahead with the bid and if the offer is accepted then decide if he wants to continue to operate stores or simply liquidate them himself. And while Najafi Companies is the stalking horse bidder that bid must be approved by the court; it is believed that some objections to the bid will be filed by the July 11 deadline by a party who believes creditors would receive more money from an outright liquidation. Based on the papers filed by Borders to date, it is a close call about whether the $435 million Najafi offer that includes the assumpetion of $220 million in debt would be better than liquidation to publishers and others. Of course a revived Borders that would continue to sell books would provide the best return, but publishers are not convinced that could happen even under new management. It is unlikely Najafi would withdraw the bid since the company is entitled to a $6.45 million breakup fee if another offer is approved. At this point the only other bid is the backup bid by the liquidator group that would result in liquidation of the entire chain.
