Robot 6

Borders halts payments to some publishers

Borders

The troubled Borders Group, the second-largest bookstore chain in the United States, announced Thursday it’s delaying payments to some publishers as it attempts to restructure its credit lines. The news sent shares tumbling 11 percent.

“As part of this potential refinancing, Borders has determined that it is necessary to restructure its vendor financing arrangements and is delaying payments to certain of its vendors,” company spokeswoman Mary Davis told Reuters. Although she declined to provide the names of the publishers, she said Borders was working with them to restructure their arrangements with the chain.

The Ann Arbor, Mich.-based bookseller reported earlier this month that an inability to secure adequate financing could result in a “liquidity shortfall” in early 2011, meaning the chain would run out of cash to conduct day-to-day business.

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in other words . boarders may start the new year off by being the first business to go out of commision unless they manage to get their cash flow improved or maybe just offer themselves to barne’s and nobles. and just sadly be no more

Smart minds have declared Borders down for the count over the past couple years, but there’s still a lot of bite in them. While a publisher who’s not being paid on time MIGHT cut off shipping (and there are few publishers who don’t want at least their big new bestsellers in Borders), the most common way of bypassing a publisher you’re not paying is to get their books from a wholesaler like Ingram or Baker & Taylor. It’s definitely not a winning solution (for either side), but Borders has sneaked away from disaster by doing this in the past with big publishers.

Smart money seems to be a merger of the two major chains (B&N and Borders), which would eliminate competition in a diminishing market and increase market share in cities where one or the other is predominant (for instance, B&N would love to have a larger market share in Ann Arbor and Chicago, where Borders traditionally reigns). The most-hurt victims by such a merger? Small publishers who have the most to lose from a decreased number of chain stores and large returns, and (as usual) independent bookstores.

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