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Days Before Bankruptcy Filing, Borders Pushed Customers to Pay for Annual Memberships

Days Before Bankruptcy Filing, Borders Pushed Customers to Pay for Annual Memberships

In the two months leading up to today’s bankruptcy filing by Borders Group Inc. (the company that runs Borders bookstores), I received numerous e-mails and in-store pitches asking me to pay $20 to join the “Borders Rewards Plus” membership program, with the most recent e-mail coming just six days ago. But the company had not know that it was on the brink of bankruptcy, and that the membership would be worthless if Borders were liquidated. If a person has pay the annual membership fees before bankruptcy, then what should be done. The hiring of the san diego bankruptcy lawyer will provide the solution to the clients. 

On February 9, 2011, I received an e-mail offer from “Borders Rewards,” pitching the following offer: “For just $20, upgrade to Borders Rewards Plus and get $10 in BONUS Borders Bucks redeemable 3/14/11 – 3/20/11.” The Borders Rewards Plus program apparently provides larger discounts on purchases at Borders bookstores. I assume that many people joined the program in response to the e-mail, although I did not.

Then, today (February 16, 2011), Borders Group Inc. filed bankruptcy. The company reportedly intends to shut down 30% of its stores. [See, e.g. Kary, Tiffany and Erik Larson. “Borders Files Bankruptcy After Years of Market Losses,” Bloomberg, 2/16/11. Downloaded from: http://www.bloomberg.com/news/2011-02-16/borders-book-chain-files-for-bankruptcy-protection-with-1-29-billion-debt.html].

If Borders Group Inc. continues to operate in bankruptcy and continues to honor the Borders Rewards Plus program, then the memberships will have value to those who purchased them (although that value will be diminished for those who currently shop at Borders stores that are about to be shut down).

But there is at least a chance that the Borders Group Inc. reorganization will fail, and that the Chapter 11 bankruptcy case will be converted to Chapter 7 where the company will cease operations and be liquidated (a liquidation could also occur in Chapter 11, but that apparently is not the debtor’s intent). In that case, the Borders Rewards Plus memberships would be worthless.

Why does all of this matter? Because Borders’ management, in a last-ditch effort to raise cash, might have sold Borders Rewards Plus memberships to unwitting customers even though management knew there was a decent chance that those memberships would have little or no value. My recollection is that the e-mail invitations to upgrade my membership increased markedly during the two months immediately before this bankruptcy filing.

At this stage in the bankruptcy case, I am sure Borders Group and its attorneys are focused on urgent matters (so-called “first-day motions”), such as approval of debtor-in-possession financing, obtaining court permission to use bank accounts, and approval of the retention of legal counsel and other professionals. Sometime down the road, though, I would like to see the Bankruptcy Court address Borders’ sales practices on the eve of its filing. A lot of Borders Rewards Plus customers are going to feel like suckers when they hear about Borders’ bankruptcy filing.

Mark Campus

Mark Campus

Mark Campus is a content marketer who owns Keenan’s room. A writer by day and a reader by night, he is loath to discuss himself in third person.