Judge lets Borders use $400M to stay open

2/17/2011

NEW YORK — A judge has granted Borders Group approval on an interim basis to use $400 million of the $505 million in financing it has been offered to pay back its vendors and keep its business going, including its loyalty program and gift cards.

The decision late Wednesday is the start of a lengthy and difficult process for Borders, which filed for bankruptcy protection on Wednesday. The No. 2 U.S. bookseller is attempting to successfully reorganize so it can emerge from bankruptcy protection a smaller and profitable company.

Borders is accepting bids in an auction for companies to run its store closings and clearance sales. Hilco Group is the stalking horse bidder, meaning the liquidating service must be paid a breakup fee of $1 million if it is not chosen in the auction.

Store clearance sales are expected to begin Saturday.