NEW YORK (AP) — Borders Group teetered on the brink of liquidation Thursday after an offer from a private-equity investor disintegrated.
The bookseller appeared to have found its white night in Najafi Cos. back in July, when the private-equity investor from Phoenix offered $215 million for the company, plus the assumption of $220 million in debt.
But on Wednesday creditors objected, saying that the agreement would not prevent Najafi from taking possession of the company and liquidating it immediately for profit.
Creditors said a bid from liquidators Hilco Merchant Resources and Gordon Brothers is stronger. They believe it would pay out between $252 million and $284 million in cash.
That offer should be the primary, or "stalking horse" bid, instead of the one from Najafi Cos., creditors said.
Creditors said in a court filing that they were hopeful Najafi would submit a higher bid, but Najafi stood by its original offer.
On Thursday, Borders said it wouldn't seek approval for Najafi's bid in a hearing scheduled for 10 a.m. in the U.S. Bankruptcy Courth Southern District of New York and designated the liquidators as the "stalking horse" bid.
Another bidder could still step in.
Borders Group Inc., based in Ann Arbor, Mich., filed for bankruptcy protection in February. The company started with a single store in 1971, and helped pioneer the book superstore concept along with larger rival Barnes & Noble Inc. It was brought down by heightened competition by discounters and online booksellers, as well as the growth in popularity of electronic books. It currently operates about 400 stores, down from its peak in 2003 of 1,249 Borders and Waldenbooks.
Borders said it will accept bids until 5 p.m. Sunday and will give notice by Monday if no other bid emerges.