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BKBorders11.06-09StoreList

BKBorders11.06-09StoreList

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Categories:Types, Business/Law
Published by: Honolulu Star-Advertiser on Jun 10, 2011
Copyright:Attribution Non-commercial

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08/11/2011

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2282931v46/8/201110:10 PM
Hearing Date and Time: TBDObjection Deadline: TBD
David M. Friedman (DFriedman@kasowitz.com)Andrew K. Glenn (AGlenn@kasowitz.com)Jeffrey R. Gleit (JGleit@kasowitz.com)KASOWITZ, BENSON, TORRES & FRIEDMAN LLP1633 BroadwayNew York, New York 10019Telephone: (212) 506-1700Facsimile: (212) 506-1800
 Attorneys for Debtorsand Debtors in Possession
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORKIn reBORDERS GROUP, INC.,
et al.
,
1
Debtors.Chapter 11Case No. 11-10614 (MG)(Jointly Administered)DEBTORS’ MOTION FOR ENTRY OF ORDER (I) AUTHORIZING THE DEBTORSTO SELL CERTAIN ASSETS THROUGH STORE CLOSING SALES, (II) APPROVINGBIDDING PROCEDURES TO SELECT LIQUIDATING AGENT TO CONDUCTSTORE CLOSING SALES, (III) AUTHORIZING DEBTORS TO ABANDON UNSOLDPROPERTY, (IV) WAIVING COMPLIANCE WITH CONTRACTUAL STORECLOSING SALE RESTRICTIONS, (V) EXEMPTING LAWS RESTRICTING STORECLOSING SALES AND (VI) GRANTING RELATED RELIEF
TO THE HONORABLE MARTIN GLENN,UNITED STATES BANKRUPTCY JUDGE:Borders Group, Inc. and its affiliated debtors, as debtors and debtors in possession(collectively, the “Debtors”), by their undersigned counsel, respectfully submit this motion (the
1
The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number,are: Borders Group, Inc. (4588); Borders International Services, Inc. (5075); Borders, Inc. (4285); BordersDirect, LLC (0084); Borders Properties, Inc. (7978); Borders Online, Inc. (8425); Borders Online, LLC (8996);and BGP (UK) Limited.
 
2“Motion”) for an order (I) authorizing the Debtors to sell certain assets, consisting of merchandise (the “Merchandise”) and owned furniture, fixtures and equipment (“OwnedFF&E”) located at up to 51 of their stores (the “Closing Stores”) identified in Exhibit A
2
,through store closing sales (the “SCSs”), free and clear of all liens, claims or encumbrances andto enter into an Agency Agreement in substantially the form annexed hereto as Exhibit B withthe liquidator selected to conduct the SCSs (the “Liquidating Agent”), (II) approving biddingprocedures to select the Liquidating Agent, (III) authorizing the Debtors to abandon unsoldMerchandise and Owned FF&E after conclusion of the SCSs, (IV) waiving compliance withprovisions in the Debtors’ agreements restricting store closing sales (the “ContractualRestrictions”), (V) exempting the Debtors from state and local rules, statutes or ordinancesrestricting store closing sales (the “Applicable Law Restrictions”), and (VI) granting relatedrelief. In support of this Motion, the Debtors respectfully represent as follows:
PRELIMINARY STATEMENT
3
For months, the Debtors and their advisors have worked diligently to obtain extensions of the September 14, 2011 deadline to assume or reject leases from their landlords. The Debtorsefforts have been fruitful; they have received extensions for nearly 365 or approximately 90% of their leases as of the date of this Motion. The Debtors continue their discussions with landlordsand believe that, with additional time, they can obtain extensions at many of the remaining 51locations. Nonetheless, the Debtors will not be able to obtain extensions for at least some of their locations.
2
As discussed
infra
, the Debtors will continue to negotiate extensions with landlords and, as such, the number of Closing Stores may decrease after filing this Motion and before the hearing thereon.
3
Capitalized terms used in this Preliminary Statement, but not defined, are ascribed the definitions containedelsewhere in this Motion.
 
3Most of the stores for which the Debtors have not obtained extension stipulations areamong the most profitable in the portfolio or have leases which are under market. The Debtorswould assume these leases, but various creditor constituencies have indicated that they wouldoppose any such assumption outside of the context of a sale of the business as a going concern orconfirmation of a plan of reorganization. As the Debtors recently informed the Court, theDebtors are actively negotiating a going concern sale with multiple potential buyers; thesebuyers have indicated that they also wish to purchase some of the stores that are subject to thisMotion.The Debtors believe in their business judgment that the stores to be liquidated pursuant tothis Motion should not be liquidated under these circumstances. The liquidation of these storesmay not maximize their value for the benefit of creditors and will result in a significant loss of  jobs. Indeed, if this Motion is granted, the Debtors will not be able to sell the stores subject tothis Motion to a going concern buyer because they likely will have liquidated pursuant to thisMotion first. Unfortunately, the Debtors’ DIP financing facility requires the Debtors tocommence store closing sales within certain deadlines before the assumption/rejection deadline.This leaves the Debtors with a Hobson’s choice: the Debtors can proceed with store closingsales at these stores under these unfortunate circumstances or, if they refuse to do so, risk beingplaced into default by DIP lenders.The Debtors have requested a waiver of the requirement to liquidate these stores pendingthe proposed scheduling of a hearing to consider the sale of the entire business on or about July21, 2011.
4
While the DIP lenders are considering the proposal, they have not provided suchconsent as of yet and good faith negotiations are ongoing. The Debtors hope to obtain such
4
While previously the DIP Lenders offered the Debtors a one week extension to the deadlines in the DIPFacility, that extension clearly was insufficient to allow a going concern buyer time to complete due diligenceand to consummate the transaction.

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