Borders Delays Payments To Vendors For 2nd Month

Stumbling book store chain Borders has said that it would delay payments to landlords and vendors for the 2nd month in a row. In a terse press release, the company said the move was meant to “help the company maintain liquidity while it seeks to complete a refinancing or restructuring of its existing credit facilities and other obligations.” In other words, they’re trying cling to cash and stave off bankruptcy. Borders also announced receiving a $550 million loan from GE Capital. Better keep pushing those loyalty cards to customers that could become worthless pieces of plastic if the company goes belly up, Borders clerks, you’re our only hope! Customers, if you got a Borders gift card for Christmas, now might be a good time to cash it in.

Borders Takes Step to Protect Liquidity, Delays Additional Payments to Vendors, Landlords and Other Parties [PR Newswire]

Employee: Borders Is Making Us Push Loyalty Cards That May Be Worthless If Company Declares Bankruptcy
Borders Meets With Publishers Instead Of Paying Them


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  1. Loias supports harsher punishments against corporations says:

    Not paying their vendors and landlords is better than not paying their taxes. Many a company have tried that and it never goes well. Vendors will sue you, but the IRS will prevent you from doing business, fine you into oblivion, and then throw you into jail.

  2. FatLynn says:

    I thought they got their loan. It wasn’t enough? Uh-oh.

  3. Ouze says:

    Remember guys – when you walk away from a mortgage as a peon there’s a whole moral component – and when you don’t pay your bills as a corporation, it’s a wise strategic move!

    • Blueskylaw says:

      Hey, you stole my battleship!

      See post below yours.

    • Cosmo_Kramer says:

      WTF are you going on about? Who has ever said that it is morally wrong to walk away from a mortgage that you can’t afford to pay? This isn’t a situation where they’re trying to avoid paying their obligations. They’re delaying paying their obligations to try to find a way to continue paying their obligations.

      • MMD says:

        Read the comments on this past Consumerist article:

        Lots of rhetoric about personal responsibility, lots of moral judgments and a bit of name calling!

        • not-gonna-tell-ya says:

          Because the homeowners weren’t doing it because they didn’t have the money. It’s because they were losing money by paying into a mortgage ‘investment’ that had lost value. Borders just can’t pay their bills. It’s apples and oranges.

          Now if Borders said “Hey, our fixed assests are costing us 2 million a month, but they are only worth 80% of that, let’s not pay” then you would have something.

          • MMD says:

            The details differ, but there’s still a conscious decision being made to pay one kind of debt over another. Why is there no ethical component to that decision making?

      • Ouze says:

        here is a verbatim quote from the comments in that story where a citizen was living in the house while waiting to foreclose:

        I’m sorry, but I think this makes you a terrible person. You’re not making payments, continuing to live in the house and “stockpiling” cash. You know, exactly what Borders is doing here?

        Like I said. Do it as one of the peons, you’re a terrible person. Do it as a corporation, it’s just good business.

        there are dozens of comments in that vein on virtually every strategic default story on consumerist.

        • Ouze says:

          er” You know, exactly what Borders is doing here?” was not part of the quote.

        • Cosmo_Kramer says:

          I’ll say it again – the people who are criticized for walking away from their mortgage are the people who have no financial impediment preventing them from fulfilling their obligation indefinitely. That is, people who just decide that their house isn’t worth enough to warrant paying off the loan. That is NOT what is happening here. Borders DOES have a financial impediment preventing them from fulfilling their obligations – they will run out of money.

          If you can’t afford to make your house payments, or would run out of money in a short time if you continued paying your house payments (because your income has dropped below your expenses), then no reasonable person would criticize you for allowing your house to be foreclosed.

          You’re not holding Borders to the same standard as individuals.

          • MMD says:

            Can we say with certainty that Borders can’t fulfill their obligations? I know that’s what they’re saying, but do we accept that at face value?

            And why aren’t we talking about the ethics behind the decision making if they truly must choose between paying one debt over another? Why doesn’t that come up at all? That’s what I take Ouze’s original point to mean.

  4. Blueskylaw says:

    “Borders has said that it would delay payments to landlords and vendors for the 2nd month in a row”

    The Mortgage Bankers Association, who exclaimed that it is immoral for individuals to not pay their mortgages have sent out a press release saying that this situation is OK because it is only the landlord that is suffering and not their clients.

  5. kingofmars says:

    There is a Border and a Barnes and Nobles near me, and I can never remember which is which. They are both big stores, and they sell books for more than what they cost on amazon. I guess it’s not really surprising that Borders is going under.

    • tbiscuit360 says:

      How can you not tell the difference??? B&N has a much much classier look to it and is a much nicer/kept up store than Borders.

      • pecan 3.14159265 says:

        The B&N near me is definitely a lot nicer than Borders, and you can definitely tell the difference from the outside. I think it was Borders’ fault because it went with a much, much more simplistic logo and B&N kept its fantastic font and the B&N “sign” on the front of the building is about twice the size of the Borders sign.

        And the books are more expensive than Amazon, true, but that’s a little like comparing apples to oranges. Is cheaper than is a more appropriate comparison. B&N the store was always much, much cheaper than Borders. I’ve never shopped at Now that I’ve switched completely (or more or less completely) to ebooks, gets all of my money.

        • Arcaeris says:

          Yes, is always cheaper than’s prices, as I’ve seen, pretty much match the stores.

          I’m sad Borders is closing though, because they’re the browsing section for Amazon for me. If I see something I like in the Borders, I pull out my phone and one-click order the book and have it the next day. Now I’ll have to drive all the way to BN for this.

          • pecan 3.14159265 says:

   probably isn’t as expensive as the B&N store because doesn’t sell at MSRP. It might be more expensive than, but it won’t be as expenisve as the B&N store because at the brick and mortar store, most of the books that aren’t new releases or under promotion are being sold at MSRP.

      • dolemite says:

        Who knows…I’m with the guy up top. I’ve been in both, and I merely look at the price tag on a book and go “I can get this for 50% cheaper online”. Then there are some hipsters playing on their Macs, sipping lattes and I go “I’m outta here”.

  6. LBM says:

    :>) When I saw the original story I took my xmas gift card I got and cashed it in.

  7. Maxamus says:

    Tick tock tick tock…..

  8. MMD says:

    The Borders in my old neighborhood in Chicago just announced its Store Closing sale. I wonder how many more stores are on their way out?

  9. faislebonchoix says:

    It’s one thing to not pay a mortgage; it’s another thing to not pay your rent. So how does it work when a mall evicts a store? Do they just throw all the merchandise into the mall corridors after hours?

    • NatalieErin says:

      The landlord’s remedies would depend on state law and the terms of the specific lease. Commercial leases are more likely to vary from company to company, particularly for large corporations, because they actually negotiate the terms. Lockouts are not allowed in some states, so the landlord would have to go to court before being able to evict the store.

      The most likely scenario would be the landlord having to hold onto whatever was in the store for a specific period of time (usually 30 or 60 days). It’s pretty unusual for commercial tenants to abandon property, though, since there is a pretty strong market for second-hand retail and office furniture. Selling their property rather than abandoning it could defray some of their debt.

  10. Holybalheadedchrist! says:

    I used to work at Borders and remember those headier times when a company exec flew in from HQ in Ann Arbor to see how we were running the joint in Colorado. At 10K an hour for the flight , I was surprised to learn he was hitting a dozen or so locations on his jaunt through the Southwest region. He stayed all of 45 minutes and his phone rang twice, playing the Boston College fight song, which really annoyed everyone.

    Back then it was a great place to work, with great, intelligent, literate folks. The staff was honestly amazing and some are still my friends. What sucked was you never felt the company had any idea how good these people were at their jobs. They loved books–loved reading–and would bend over backwards to set a customer on a cool author. That never seemed to matter. All we heard from Ann Arbor was “more e-mail addresses,” “upsell with bargain books or coffee.”

    The three managers at my store worked a combined 160 hours per week. I know many people could say they work more, but they put in a huge effort for that place considering the benefits were minimal.

    When I worked at Borders, I had just finished an MFA and was hired alongside a man with a master’s in computer science and a doctoral graduate in physics. We all made $6.50 an hour to start. We were all treated like dogs, which is to say like your typical retail employee, but it felt like despite our backgrounds, there was zero appreciation for any skills we might bring to the company.

    Despite all this, Borders was always a better store to shop in. I would go there, even after I’d quit. I always enjoyed the atmosphere.

    For all the emphasis on Borders, I don’t think B&N will be far behind. Neither is a sustainable business model, going forward.

    • MMD says:

      B&N has the Nook, though, which has been selling like mad. That may prop them up for a while…

      • pecan 3.14159265 says:

        B&N as a physical bookstore may have to downsize, but B&N as an online bookstore is doing very well. I can see B&N shifting more focus toward digital sales and emphasizing that over the store locations. It costs a lot of money to have those physical stores. If B&N thinks the ereader is the future, and it’s putting a lot of focus on its Nook devices (which are fantastic), I can see B&N being just fine as an online retailer.

        Where Borders went wrong is when it failed to adapt like B&N. It doesn’t have its own ereader, the ones it has are relatively obscure, and it didn’t offer a streamlined system for purchasing books or device help.

    • webweazel says:

      It might depend on the store. We go to the B&N near us once in a while, and it’s always pretty packed full of people. Not just browsers, either, there’s always a line at the register. The coffee bar almost always has a line, too.

      We also has a Movie Gallery near us which we used a lot. They had used movie sales all the time, DVD’s like $15 each, buy 1 get 2 free sales. We stocked up constantly. Renting movies it usually took us 15-20 minutes to check out because of constant long lines. Movie Gallery company went down, POOF our video store went down, too.

      If the paying customers are there almost in droves, what the hell are they doing to ruin the business model with profitable stores? Close the un-profitable stores, keep the profitable ones open. Reduce your multiple-layers of expensive upper management, and be a business, albeit a much smaller leaner business. In the interim, looking for DIFFERENT ways to expand in the future times. What’s wrong with that scenario?

  11. anime_runs_my_life says:

    Looks like it’s time to start looking at Amazon and other online places for manga and books.

  12. jimmyhl says:

    Who the hell lends half a billion to a company that hasn’t paid its rent for two months? If I were a GEF shareholder I’d be going berserk right now.

  13. Toffeemama is looking for a few good Otters says:

    My husband just bought me the upgraded rewards card. All after I told him that I’ve been trying to avoid buying more books from the store in favor of downloading them to my e-reader too. Oh well, it made him happy to get it for me anyway, and it was only $20. Hopefully I’ll get some of the money back by stopping in for coffee enough times before the stores start to close.

    • pecan 3.14159265 says:

      :( I guess he didn’t actually listen to you. Check the member agreement and see if you get any of your money back (prorated, probably) if you cancel before you use the card.

      • joshua70448 says:

        I believe she meant that she’ll get her money’s worth out of the card by getting discounted coffee, not that she’ll get a refund for it.

  14. Corinthos says:

    I hope my Borders doesnt go under. I have a Barnes and Noble but its in the ghetto and I don’t care to drive there. When they first opened Barnes and Noble was in a good are and as the years went buy a bunch of section 8 housing moved around it. Cops are near it always because people like to loiter in the parking lot. Some guy got beat down in the parking lot around 5 years ago and put into a coma.

  15. FireJayPa says:

    This is the one that sells Seattle’s Best? Right?

    If so, that explains a lot. If that’s Seattle’s Best, I’d hate to try their worst. *Rimshot*

    /I’ll be here all night
    //Try the veal

  16. Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

    I can’t wait for their going out of business “firesale”.
    I’ll make a… wait for it…

    “Run for the Borders”

  17. WHC999 says:

    Looks like locally owned book stores will be the only ones left now that the huge-mega chains have all imploded on themselves. I like the idea that the best competition to the Interweb is Mom & Pop. For a lot of people, myself included, browsing in a book store is a favorite past time these days.

    • pecan 3.14159265 says:

      I’ve always had a problem balancing my desire to support local business with the justification for buying books at local shops. I love browsing my local shops, but I find it very difficult to justify buying books at full MSRP. Publishers price books knowing that they’ll be reduced by 30% right off the bat. $27 for a hardback is insane.

      Now that I’ve switched to an ereader, I find that I can support local shops even less. I like physical books, but I don’t have the room to store them once I’m done with them, and while I love my local library system, donating books as soon as I’m done reading them seems like a waste of my money.

      I usually browse books, make a note of which ones I want to read, then scour the public library Overdrive site or add it to my list to get them at B&N for my ereader.

    • TonyK says:

      Except places like B&N, Books-A-Million and Borders have ran the locally owned stores out.

    • KainCooper says:

      All of my local book store have jack. Unless you want some books you can find bargain bin at other places or some obscure things you’ve never heard of. I think the only thing keeping the ones around me in business are the dirty books that women read with Fabio or some guy like fabio on the cover..

  18. AllanG54 says:

    My wife buys about 30 books a year from Borders but unfortunately when you get on the bandwagon of new ways of doing business too late, you’re put in a position of never being able to catch up. They don’t have an e-book store of their own like B & N and only sell readers from other companies. Like Blockbuster trailing Netflix, I think we’ll not see them around too much longer.

  19. yessongs says:

    Yes I can hear the band starting to play now… It’s just like the Titanic.

  20. MikeVx says:

    I’m a book packrat. I’ll keep them forever, barring damage. I’ve had an Ectaco JetBook Lite for several months, and have been feeding it lots of free e-books from the Internet, as well as e-books bought from e-book companies that have figured out that DRM is a bad idea. I’m not tying an e-book to a single device.

    I also find myself unexpectedly owning a Kindle. As an e-book reader, it’s something of a train wreck. While reading a book is good because of the screen, the interface lacks support for directories (what Windows victims call folders) and the device gathers all books into a single level. Storing an organized library on the thing is a lot of work, too much when simply accessing the directory structure that you can load onto it would do nicely. It’s not really an e-book reader, it’s a sales platform that also lets you read e-books.

    I still buy paper books, and one problem is that the two nearest book stores to me are both Borders. There is a Barnes & Noble, 20 minutes away tucked into a mall that is so poorly placed that you can easily fail to find it if you haven’t been there before, and is still tricky if you have. If Borders packs up I’ll either go there are order on-line a lot. I don’t have to use a GPS to find Amazon.