Borders UK, the beleaguered bookseller, collapsed yesterday afternoon after a day of high drama in which the accountancy firm originally lined up as administrator walked away over a "conflict of interest".
The 45-store bookseller, which includes Books Etc, finally appointed the restructuring specialist MCR as administrator on Thursday, putting 1,150 jobs at risk. Borders UK had initially served a notice of intention to appoint BDO as administrator on Wednesday afternoon. But yesterday morning, BDO said it "uncovered a conflict which has prevented BDO from being able to act as administrators to Borders UK", but declined to say what this conflict was.
Phil Duffy, a joint administrator at MCR, said it is "indicative of the weakening position of book retailers in the current market with competition on bestsellers from supermarkets and the growing strength of the digital and on-line markets in this sector". Borders UK stopped taking orders on its website on Monday and a number of publishers had stopped supplies over recent days. Credit insurers had also reduced cover to its suppliers since 2008. MCR said that Borders stores will remain open while it undertakes a review.
After opening in the UK in 1997, Borders US sold the bookseller to Risk Capital Partners, the private equity firm of Luke Johnson, the outgoing Channel 4 chairman, in September 2007 for £20m. In July, Borders UK was sold in a management buy-out deal, backed by Valco Capital Partners, the investment arm of Hilco.
MCR said that all outstanding wages for employees have been paid. The administration – which comes one year after the collapse of Woolworths – could lead to a stock liquidation sale before Christmas, dealing a blow to rival booksellers Waterstone's and WHSmith. In the year to 2 February 2008, Borders UK's pre-tax losses widened to £13.6m.