bankruptcy auction
Equity firms to buy Borders out of bankruptcy?
As the times change, so does technology. Unfortunately, in order to stay profitable, many industries need to keep up with the changes or they could be left in the dust. Such is the case for Borders Group Inc., which filed for Chapter 11 bankruptcy protection in February of this year.
The bookstore giant’s economic hardships are partly due to the gaining popularity of electronic readers such as the Kindle, by Amazon and the Nook, by Barnes and Noble. After its own failed attempt to release an e-reader and consistent poor sales, Borders closed 237 of its 642 stores in 2011 before filing for bankruptcy protection.
Reportedly, the company had been trying to reorganize its debts under Chapter 11, but after continuous losses it is now being said that the bankruptcy court will hold an auction to sell the company in effort to keep more stores from closing and to keep the business in operation.
Bloomberg reported that there are two private equity firms that are planning to make the opening bids on Borders. One firm is called Najafi Cos., which is based in Phoenix and just purchased French CD and DVD clubs from Bertelsmann AG, the biggest media company in Europe.
The other potential bidder is Gores Group LLC, a private-equity firm out of Los Angeles which is supposedly seeking at least half of Borders’s stores, Bloomberg reported.
“You have to have some strategy for buying Borders. The younger generation doesn’t walk into a bookstore to buy a book,” a Wall Street bankruptcy attorney told Bloomberg.
Regardless of who buys Borders, this might be the best option for the company, which started off as one used book store in Michigan operated by two brothers as they went through college and grad school. Selling the company could appease its creditors so that more stores do not have to be closed.
As you can see, Chapter 11 bankruptcy is much more complex than Chapter 7 bankruptcy and can bring different results for companies with the goal of keeping the business in operation while figuring out a way to pay back creditors.
Source: Bloomberg, “Najafi Said to Be Considering Buying Borders Book Stores Out of Bankruptcy,” Tiffany Kary and Lauren Coleman-Lochner.
Colorado Crossing Developer Hopes Reorganization Proposal is Approved
Immediately before the economy took a down turn, the real estate market was booming and multi-use projects looked like the next prosperous trend. Then, the economy went into recession stalling a significant number of projects and leaving the developers with half finished buildings and no funding to continue. Colorado Crossings was one of the multi-use projects whose completion was prevented by the recession, forcing the developer to file for Chapter 11 bankruptcy protection.
The developer recently filed a reorganization proposal in a Denver bankruptcy court that is pending approval. The reorganization plan includes the sale of 17.5 acres of the Colorado Crossing site. The designated land would remain on the market for approximately 6 months to build interest in the property, and then it would be sold or auctioned to the highest bidder. Proceeds from the sale would go towards paying $776,000 in back taxes owed to El Paso, Denver and Douglas counties, and the remainder would be used to pay contractors and subcontractors. The proposal also includes a plan to sell or refinance an additional 109 acres.
Creditors claim that the proposed reorganization plan for the commercial real estate would fail to raise enough money to settle the large amounts of debt owed. According to the disclosure statements, 80 companies are owed over $25 million and that number would increase to $36.9 million if forced to liquidate instead of reorganize. Creditors cite a document filed during initial bankruptcy proceedings that estimate the 17.5 acres value at approximately $15 million. Creditors are in the process of creating their own reorganization proposal which they plan to submit to the bankruptcy court.
Source: The Gazette “Developer of stalled Colorado Crossing project files reorganization plan” Rich Laden 9/30/10
Colorado Bankruptcy Court Orders Auction of Historic Greely Complex
A piece of Greely, Colorado’s history will be sold at an auction early next month. The historic complex formerly known as The Villa Assisted Living and now part of the University of Northern Colorado, located at 1750 6th Ave is set for bankruptcy auction on November 12, 2011 by order of the bankruptcy court.
The complex consists of seven buildings, some dating back to as early as 1939 when they were used as dormitories for students attending the Colorado State Teachers College which later became the University of Northern Colorado. Two of the newest buildings located on the premises were completed in 2000 and operated by Avalon Correctional Services as a community corrections center.
The program had been shut down by officials in 2008 after several allegations were made that accused the staff of having sexual relations with inmates housed at the correctional center. Complaints made to the City of Greely and Weld County also included allegations that a tunnel running beneath the structures contained dangerous weapons and paraphernalia used to consume illegal drugs. When the facility closed its doors, the inmates were transferred to the Weld County Jail.
Kreps Wiedeman Auctioneers & Real Estate of Greely will be conducting the auction and handling matters relating to the sale of the bankruptcy real estate spanning over 85,000 square feet on a five-acre site. Ed McClendon, spokesperson for the real estate company, told reporters that many callers have phoned the office seeking further information and that there is a significant level of interest in the auction of the historic site. “It’s really kind of a strange deal,” he said about the sale of the complex. “The older buildings don’t meet code and the newer ones have been vandalized. But those old buildings sure are grand. If those walls could talk…”
Source: The Greely Tribune “Local historic complex to be auctioned off” Bill Jackson 10/21/10