The Borders Group, the bankrupt 40-year-old bookseller, said on Monday that it will move to liquidate after no last-minute savior emerged for the company.
Borders said in a press release that it will proceed with a proposal by Hilco and the Gordon Brothers Group. That liquidation plan will be presented to the federal judge overseeing the company's bankruptcy case on Thursday.
What is left to unwind are Borders' 399 stores, about two-thirds of the locations it operated when it filed for bankruptcy in February. It currently has 10,700 employees.
Borders will begin closing down its remaining stores as soon as Friday, and the liquidation is expected to run through September.
The development came as little surprise, ever since a committee of Borders' biggest unsecured creditors rejected the company's plan to sell itself to the Najafi Companies for $215.1 million. The committee had argued that the bid by Najafi, which also owns the Books-of-the-Month Club, could have allowed the investment firm to liquidate borders without letting creditors benefit.
Najafi has since said publicly that it would not make another bid for the company.
Borders had set Sunday as a deadline to find alternatives to liquidation. But while it had held talks with the likes of Books-a-Million, the bookseller was unable to sign up another deal.
"Following the best efforts of all parties, we are saddened by this development," Mike Edwards, Borders' president, said in a statement. "The headwinds we have been facing for quite some time, including the rapidly changing book industry, eReader revolution, and turbulent economy, have brought us to where we are now."
While Borders was unable to find a buyer for most of itself, some of its rivals -- notably its bigger rival, Barnes & Noble -- have expressed interest in purchasing a few locations.
The company, which began in 1971 as a used bookstore in Ann Arbor, Mich., had fought to stay afloat for years amid a difficult retail environment, persistent management turnover and a failure to move aggressively in the e-book space. In February, it filed for bankruptcy protection and subsequently closed about one-third of its 650 stores.
Publishers were disheartened but hardly surprised by the announcement, as they have watched Borders's troubles deepen for years. According to Bowker, a research organization for the publishing industry, Borders accounted for 13 percent of the overall market share for print books in 2010. By July, that had dwindled to less than five percent, several large publishers said.
After the bookseller declared bankruptcy in February, many publishers pressed Borders for a reorganization plan, but were left unconvinced that executives had a viable way to revamp the company.
"It saddens me tremendously because it was a wonderful chain of bookstores that sold our books very well," said Morgan Entrekin, the president and publisher of Grove/Atlantic, an independent publisher. "It's part of the whole change that we're dealing with, which is very confusing."
The news exposed one of publishers' deepest fears: that bookstores will go the way of the record store, leaving potential customers without the experience of stumbling upon a book and making an impulse purchase. In the most grim scenario, publishers have worried that without a clear place to browse for books, consumers could turn to one of the many other forms of entertainment available and leave books behind.
Independent shops have closed in droves as book sales have moved online, especially to Amazon. Barnes & Noble put itself up for sale last year and has focused on expanding its digital footprint as sales of print books have sputtered.
Publishers said with Borders gone, they would plan for smaller print runs and shipments. Employees at major publishing houses worried that layoffs could be imminent, as many companies have dedicated staff members that work only with Borders.
The closing could have a particular impact in paperback sales. Borders was known as a retailer that took special care in selling paperbacks, and its promotion of certain titles could boost them to best-seller status.