REDGroup: Borders e-books survive, the bricks and mortar stores are dead

Borders stores to close

I have been following the REDGroup insolvency for a while, as Borders had the only strong play in the local market with its link with Kobo.

Borders stores to close

In a nutshell, the US-based Australian and New Zealand Borders stores were bought out by private equity purchase by a group in NZ, who then dumped the cost of buying the Borders brand, as well as Angus and Robertson bookshops and Whitcouls (a new Zealand bookseller) onto a new entity REDGroup.

When the Global Financial Crisis hit, the cheap credit dried up. The debt load, as well as poor business decisions and declining sales forced the company into Administration the day after the US Borders Group went bankrupt.

Now the Administrators (Ferrier Hodgson) tried to sell some of the businesses in the REDGroup as going concerns, and tried to reach an agreement called “Deed of Company Arrangement” where the company can trade again, while paying a portion of the debt to creditors.

The creditors took a look at the financials and  said no to the Deed.

So the Borders stores (which had already faced a large culling before now) are closing.

The good news is that Borders e-books is still trading.

So what does this mean?

The e-books from the e-book store are safe for now. Since Kobo supplied the Digital Rights Management (DRM), books bought before and during the Administration/Liquidation period will still be readable. You may want to move your book buying over to the Kobo webpage, at least to the final fate of Borders e-books business is finalised.