Borders UK collapses into administration

British book retailing chain Borders UK has been placed in administration after it was unable to find a buyer for its struggling stores.

The chain, which employs 1,150 people across 45 British stores, was sold by the United States-based company Borders Inc. in 2007 and sold again in July this year to a group of senior executives, backed by private equity firm Valco Capital Partners.

According to reports in the British media, Borders had been trying to sell the bulk of its sores to its main rival, WH Smith.

But this deal fell over, leaving the company with no choice but to call in administrators from insolvency firm MCR.

Phil Duffy, joint administrator, said in a statement Borders UK has been hit hard by increased competition from internet retailers weighing heavily on sales in the last year.

As a result the company has suffered from severe cashflow pressure and several suppliers have put Borders UK on reduced credit limits or stopped supplying goods all together. A number of credit insurers have also reduced cover to the company.

“All stores remain open for business as normal while the administrators undertake a review of the company’s affairs and seek a purchaser for all or some of the company’s stores in which there has already been interest,” Duffy said.

HMV, which owns the Waterstone’s chain of book stores, is believed to be interested in some of the stores, although there are big concerns among the publishing industry about the effect of the collapse so close to Christmas.

There are reports several Borders stores are already holding closing down sales and the company’s website stopped taking orders earlier this week.

REDgroup Retail which owns the Borders chains in Australia, New Zealand and Singapore, says it is trading well and has no connection to the British operation.

“Other than a common and well-recognised global brand, there is no relationship between the local Borders assets and Borders UK,” the company said in a statement.