Oct. 4 (Bloomberg) -- Borders Group Inc., the bankrupt bookseller, said it will distribute remaining assets through a liquidating trust, leaving former shareholders with nothing.
Borders, based in Ann Arbor, Michigan, explained some of its exit strategy in a liquidation plan and disclosure statement filed yesterday in U.S. Bankruptcy Court in Manhattan.
“Holders of equity interests shall neither receive nor retain any property under the plan,” the company said in court papers. Assets that haven’t been either abandoned or sold will be placed in the liquidating trust, Borders said.
A judge on Sept. 26 approved Borders’s sale of its intellectual property, including a customer database and trademarks, to former rival Barnes & Noble Inc. Borders began going-out-of-business sales at its remaining stores in July.
Borders shares have fallen to about 2 cents from more than $1.50 a year ago. They traded above $25 in October 2006.
Creditors have until Dec. 9 to either accept or reject the plan, according to court papers. A confirmation hearing to approve the plan is scheduled for Dec. 19.
Today, Borders asked a bankruptcy judge to extend by three months, to Jan. 12, the exclusive period for it to file a reorganization plan, and give it until March 12 to solicit approval of the plan.
The request to preserve its exclusive right to file a plan was made “out of an abundance of caution” because the filing of a competing plan or “even the mere threat of such a filing” would delay and possibly derail support for the existing Chapter 11 plan, the company’s lawyers said in court documents today.
Secured claims, including professional fees and taxes, will be paid in full under the plan, and some unsecured claimants may get a share of what’s left, according to court documents.
Borders sought bankruptcy protection in February with 642 stores, listing assets and debt at more than $1.2 billion each. It lost business as customers switched from paper books to e-readers. New York-based Barnes & Noble invested in its own handheld device to attract customers.
The case is In re Borders Group Inc., 11-10614, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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