Borders goes into administration

Insolvency company MCR was appointed yesterday (26 November) after discussions with potential buyers for Borders’ 45 UK stores failed.

The administrator says stores will remain open while the search for a buyer continues, adding that all outstanding wages had been paid.

The appointment of an administrator had been delayed after first choice BDO discovered a potential conflict of interest yesterday (27 November).

MCR says the retailer has “severe cash flow pressures” and that several suppliers had stopped or reduced its credit.

The firm has lost business to internet book retailers and cheaper high street rivals in recent years.

WH Smith reportedly walked away from a rescue deal to buy 36 of Borders’ 45 UK stores last Friday (20 November) and it was thought to be holding talks with other potential buyers including HMV, which owns rival bookseller Waterstone’s about a possible full or partial sale.

In addition, it has also emerged that talks between Borders and its digital agency Tangent about taking over the retailer’s online arm are thought to have collapsed because of the uncertainty over the future of the book sellers’ UK business.

Borders had been looking to offload the online arm of its business to focus on its core store offering.

The retailer had held talks with Tangent about the digital agency taking over the business and running it in-house.

The book seller was the subject of a buyout by its management team in July backed by Valco Capital Partners, the private equity arm of restructuring firm, Hilco.

Borders UK chief executive Philip Downer, in a statement at the time of the deal, said that it would allow the business to “develop our innovative approach to bookselling”.