US book chain Borders is on the brink of liquidation after the collapse of a deal with the Najafi investment firm aimed at saving the bankrupt company, the Wall Street Journal reported Thursday.
At the start of this month Borders had designated Najafi as the opening bidder in a looming bankruptcy court action, but that deal has reportedly fallen through because of objections by publishers and landlords.
The Journal said the critics of the deal, who are owed money by Borders, had complained that the Najafi bid would allow it to liquidate the bookstore chain.
The Najafi group had offered $215 million for Borders and an assumption of $220 million in liabilities, but a creditors committee said an offer of $252 million from a liquidators' group amounted to a better deal, the Journal said.
The book chain has since appointed the liquidators as the opening bidders in the auction set for Tuesday.
Borders President Mike Edwards confirmed that Najafi had withdrawn its bid and liquidators were circling, while expressing hope that other bidders would emerge to save the company, the Journal said, citing a letter to employees.
The development raises the likelihood that Borders will soon have to close its remaining 399 stores, lay off some 11,000 people and go out of business, the newspaper reported.
Borders has shut down 200 locations since it filed for bankruptcy in February but is reportedly still bleeding revenue.
The company has lost millions of dollars in recent years as the book industry has faced online competition and struggled to make the transition from print to digital products.
In July 2010, Borders launched an online electronic book store to challenge Amazon, Apple, Barnes & Noble and Sony in the fast-growing digital books market, but many industry analysts said the move came too late.