Borders Gets Extra Time to Renegotiate Leases
Publishers Lunch reports that Manhattan bankruptcy court judge Martin Glenn has granted Borders an extension of the deadline to renegotiate existing leases to September 14. The court also gave final approval on the $505 million credit facility pending several changes are made, including a provision giving the unsecured creditors committee $125,000, up from $50,000, to fund investigations of claims of secured lenders. Judge Glenn empathized with part of the creditors' objection, noting that "when I look at the incremental cost of new money coming in, it's pretty steep," but he agreed with Borders contention that they had no better options.
Amusingly, the judge also uncovered an instance of plagiarism in the Borders filing. He noticed that a Borders motion regarding paying utility companies was "taken almost verbatim" from documents written by law firm Weil Gotshal in the Blockbuster bankruptcy. The judge said Borders' attorneys Kasowitz, Benson, Torres & Freidman could not bill for that work.
Borders lawyer David Friedman then introduced a note of optimism. Reuters reports he said that the lease renegotiation extension raises hopes the chain "will emerge (from bankruptcy) either through a sale or a plan" well before the September date. The company line has not included any mentions of a possible sale. Spokesperson Mary Davis commented on Tuesday's ruling, "We are focused on moving through the Chapter 11 process as efficiently and as expeditiously as possible as we seek to reorganize Borders to return to viability and to reposition our company to be successful for the long term."