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Originally Posted by nyrath
Not to mention that the publishers who got stiffed by Borders are now financially shaky.
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Really? I assume you mean medium and small publishers, as the BPHs are generally owed on the order of $30M each; hardly back-breaking for them.
My understanding about Chapter 11 is that creditors do get paid but at the court's discretion. So suppliers shouldn't get totally stiffed. Plus, Borders isn't going into liquidation; the remaining 470-something stores will still be generating revenue (hopefully).
http://en.wikipedia.org/wiki/Chapter...ed_States_Code
Over at CNN they're talking about the likelihood of fire sales at the closing stores:
http://money.cnn.com/2011/02/17/news...sale/index.htm
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"Depending on the arrangements with the publisher, they might be able to put the books back to the publishers, said Craig Johnson, president of Customer Growth Partners. "Or the publishers might say they don't want these books."
Johnson said this is the type of arrangement that gets hashed out in bankruptcy court.
The Chapter 11 filing lists 30 publishers as creditors to Borders. Penguin Putnam holds the largest claim, at $41 million, followed by Hachette Book Group, at $37 million, and Simon & Schuster, with $34 million.
Borders files for bankruptcy
"Penguin hopes that Borders will emerge from this process as a smaller but strong book retailer, and will work closely with Borders management to support this transition," said Penguin spokesman David Zimmer.
But the publishers and Borders would not discuss their business relationship with CNNMoney.
Borders might even choose to unload heavily discounted books by moving them from successful stores and dumping them in stores that are going to be shuttered.
Bestsellers and other books that are too valuable to be discounted might be moved to other stores.
"They could go on fire sale, but more realistically they will go to the other 400 stores that will still be running," said Johnson.
"One of the great ways to get rid of obsolete inventory is to move it into one of the stores that's slated for closure," said Marshal Cohen, chief retail analyst with NPD Group. "The book business is very good at moving inventory."
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