Borders Group, Inc. filed for bankruptcy Wednesday (Feb. 16), the company announced in a press release.
Borders is the nation's second largest bookstore chain with approximately 19,500 employees throughout the United States, according to the company.
Executives said they plan to close 200 stores, with an option to close up to 75 more. Several Bay Area stores are on the list, according to court documents, including two in San Francisco, two in San Jose (including the Santana Row store) and stores in Pleasanton, San Mateo, Los Gatos, Santa Cruz and Fremont. Borders has 650 stores throughout the U.S. The store closures will take place in the next few weeks, according to the statement.
"It has become increasingly clear that in light of the environment of curtailed customer spending, our ongoing discussions with publishers and other vendor related parties, and the company's lack of liquidity, Borders Group does not have the capital resources it needs to be a viable competitor and which are essential for it to move forward with its business strategy to reposition itself successfully for the long term," Mike Edwards, Borders Group president, stated in the release.
The Chapter 11 filing will not interrupt sales, author readings and signings at open stores. Online order fulfillment at Borders.com and the Borders Rewards programs and gift cards are still valid, the company said.
"We are confident that, with the protection afforded under Chapter 11 and with the support of employees, publishers, suppliers and creditors, and the reading public, a successful reorganization can be achieved enabling Borders to emerge from the process as a stronger and more vibrant book seller," Edwards said.
Borders has operated a bookstore in downtown Palo Alto at the historic Varsity Theater building at 456 University Ave. since 1996. Landlord Charles "Chop" Keenan said Borders is current on its rent. The Palo Alto store does good business, he said.
Borders has received commitments for $505 million in Debtor-in-Possession financing, led by GE Capital Restructuring Finance. The financing will give Borders the ability to change its business strategy, Edwards said.
"This decisive action will give Borders the opportunity to achieve a proper infusion of capital in order to have the opportunity to have the time to reorganize in order to reposition itself to be a successful business for the long term," he said.