Wednesday, July 20, 2011

Borders Flips from Chapter 11 Back to Chapter 7

The Borders retail chain that specialized in books, music, and latte's has been struggling. Efforts to reorganize in bankruptcy have failed, no buyer could be found and now the chain plans to liquidate.

Headlines focus on the 10,700 jobs that will be lost across the country as the remaining 399 stores close. However, the total job loss is higher as in 2010 the company had 19,500 employees. which had zero employees when it was founded in 1994 now has around 34,000. Retail rival Barnes and Noble had around 40,000 employees as of May 1, 2010. Both of those companies are moving to ebooks, with the Kindle and the Nook.

This is what creative destruction in a capitalist economy is all about. The many small indepedent bookstores squeezed out by the big box stores may think turnabout is fair play. I have to say that I loved Borders in the mid-1980s when it was an independent on State Street in Ann Arbor, Michigan. I was never much enamored with the Borders chain stores.

Update: Borders is saying that it will complete the liquidation under Chapter 11 of the Bankruptcy Code, rather than actually switching to Chapter 7.

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