business sale
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 businessman sweeps bankruptcy auction for Windstar Cruises
Ambassador International, a prominent maritime travel company, filed for bankruptcy in December 2010. Recently, the company announced that it will be using the Chapter 11 process to sell Windstar Cruises to a wealthy Colorado business owner, Phillip Anschutz. Anschutz and his family have a long legacy in the Colorado ranching and oil-drilling industries. Anschutz Corp. is reportedly buying Windstar Cruises for almost $40 million dollars.
The deal was finalized last week as Anschutz Corp. unexpectedly entered the Windstar Cruises bankruptcy auction. Other companies, such as Whippoorwill Associates had also expressed interest in the company, but the Bankruptcy Court judge believed that Anschutz’s bid was in the best interest of the Windstar’s creditors, customers, and employees.
When a cruise line goes bankrupt, the Federal Maritime Commission can provide a total of $1 million dollars to cover refunds for pre-paid passengers. However, this amount is almost never sufficient to cover all of a line’s customer liabilities, leaving many disgruntled consumers out of luck.
Reports show that if Windstar needed to cancel their service, they would owe up to $19 million dollars in deposits and claims. The Bankruptcy Court judge overseeing Windstar’s auction felt that Anshcutz Corp.’s stable financial state would prevent the need for a mass customer refund.
Anschutz Corp. has created a new company called TAC Cruises to manage Windstar’s assets. Although it remains unclear whether or not TAC Cruises will make significant changes to the Windstar line, it appears as though no trips will be canceled during the transition. TAC Cruises also made an announcement clarifying its promise to fulfilling Windstar’s outstanding commitments to the company’s creditors and customers.
Source: Fox Business, “Favorable Tailwinds for Windstar Cruises.” Paul Motter, 20 May 2011
Colorado Business in Bankruptcy Sees a Future
Business can be fickle, especially in this economy. Your company may have a high quality and superior product. You may run your business in the most efficiently structured way possible with great management and employees but you still find that you have struggling profit margins or business debt that you cannot seem to get under control.
That seemed to be the case for TMJ Implants, of Golden, Colorado. The company manufactures a specific joint-replacement prosthesis called the TMJ Prosthesis System, a medical device used in jaw replacement procedures across the country. The miniature device is placed in damaged jaws and works like a hinge allowing the lower jaw to move. TMJ Implants was forced to file for bankruptcy but has recently received and accepted a $455,000 offer from Crocker Ventures, a company based out of Utah, to purchase their business.
The president of Crocker Ventures, a privately held life science and health care investment firm, saw opportunity and promise in the financially strained company. “Here was an excellent medical device and a top-notch team of employees simply caught in bad circumstances,” he said about the failed business. “We feel fortunate we were able to step in.”
With the prospect of hope on the horizon, TMJ Implants continues building their new Golden production facility scheduled for completion this fall. The new production facility will be the primary location for manufacturing, order processing and customer service. The sales, marketing and administration divisions will be transferred to a Salt Lake City office following the completion of the sale.
Source: The Salt Lake Tribune, “Utah’s company buys Colorado prosthesis maker” 9/29/10