One of the few remaining issues left in Borders’s bankruptcy is how much money publishers and other unsecured creditors will eventually collect. That question was not answered Monday in motions filed by the chain that outlined its liquidation plan that features the establishment of a Liquidation Trust that will handle payments from funds raised through the sale of Borders’s remaining assets. According to the motion, after all secured claims are paid the unsecured creditors will receive a pro-rated share of the remaining proceeds, the amount of which will be set sometime before the plan is confirmed. As expected, shareholders will receive no money.
The liquidation plan has the backing of Borders and the creditors committee who are recommending that all unsecured creditors support the proposal when it comes up for a vote December 9. If approved, the plan would go before Judge Glenn December 19. In the motion, Borders noted that it owed vendors $303 million at the time it filed for Chapter 11 in February and that on that date $178 million in invoices were past due.
Money to go into the Liquidation Trust will come from the sale of the IP properties and from other remaining assets which includes Borders’s stake in Kobo. The company noted that it paid C$5 million for a 9.9% interest in Kobo and plans to sell that stake to raise funds for the Trust. The company noted, however, that “Kobo may attempt to assert certain restrictions to the transferability of the Kobo Stock.”
The motion also updated two lawsuits—one with Next Jump over what Borders charged was misuse of the Borders membership list. After agreeing to what looked like a settlement, Next Jump has filed counterclaims against Borders. A class action lawsuit filed by Jared Pinsker in early September on behalf of himself and other Borders employees fired between July 23 and August 23 asserting the Borders violated the Worker Adjustment and Retraining Notification Act has also not be resolved, and Borders noted that is has not yet been served the complaint.
Finally, the motion noted that the last of Borders’s store closing sales were completed September 20.
