Page last updated at 22:09 GMT, Thursday, 26 November 2009

Borders bookshops in the UK go into administration

Borders shop
Borders has 45 stores in the UK

The Borders bookshop chain in the UK has gone into administration.

Administrators MCR said all 45 Borders and Books Etc stores would remain open while it sought a buyer for all or some of the outlets.

Borders has suffered from increased competition from online retailers and supermarkets, and its website recently stopped taking new book orders.

MCR said Borders had "severe cash flow pressures" and that several suppliers had stopped or reduced its credit.

A number of credit insurers had also reduced their cover to Borders, which made suppliers less willing to trade with the retailer and made it difficult for it to replenish its stock levels.

'Wages paid'

"All outstanding employee wages have been paid up to date and ongoing wages for retained staff will continue to be paid as an expense of the administration, said Phil Duffy, of MCR, a business turnaround specialist.

MCR is also now conducting a review of the Borders business, which employs 1,150 people.

It is therefore clear that trade credit insurers played no part its downfall - withdrawal of trade credit insurance is a symptom of a business in jeopardy, not a cause of its demise
Marc Henstridge, trade credit insurer Atradius

Waterstones owner HMV has refused to comment on recent reports it is interested in buying some of the Borders shops.

Simon Juden, chief executive of the Publishers Association, which represents the book industry, told the Bookseller trade magazine that it was "urgently" considering the situation.

The Borders chain was originally owned by the US book giant of the same name, but was sold in June 2007 to Risk Capital Partners, which is headed by Channel 4 chairman Luke Johnson.

Risk Capital then sold it on to the private equity firm Valco earlier this year.

Marc Henstridge, head of risk for UK and Ireland at leading trade credit insurer Atradius, said his industry was not to blame for Borders' woes.

"In the case of Borders, the management team were made fully aware of the lack of trade credit insurance prior to the management buyout earlier this year," he said.

"It is therefore clear that trade credit insurers played no part its downfall - withdrawal of trade credit insurance is a symptom of a business in jeopardy, not a cause of its demise."

The Borders news comes a year since Woolworths went into administration, and subsequently was closed down.

"Coming on the anniversary of Woolworths' demise where 200 of its stores remain empty, the sad news about Borders throws open the large possibility of more empty retail space," said Liz Peace, chief executive of the British Property Federation.

"And given that Borders' outlets are large shops that often anchor shopping centres, it will not be as easy to fill these."



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SEE ALSO
Borders.co.uk suspends book sales
24 Nov 09 |  Business
Borders bookshop looks for buyer
23 Nov 09 |  Business

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