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Yesterday’s news that the Borders bookstore chain is going to be sold off-much of it probably at fire-sale prices-means that some of the nation’s biggest publishers are going to be taking a bath, financially. Five publishing houses are owed more than $25 million by the bookstore chain, and many others are owed smaller amounts-but they’re likely to only receive a small fraction of those sums.
The chain’s liquidation is expected to make more than $250 million, but more than 3,000 claims have been filed against the Borders estate for a total of well over $1 billion. That means many of the biggest unsecured creditors-mostly book publishers-are likely to get pennies on the dollar for the millions that Borders owes them.
The publishers are “unsecured” creditors, who will only get paid after secured creditors, and others with special priority. For example, these creditors will get paid only after state governments that say they’re owed millions in taxes by Borders. And, of course, the small army of bankruptcy lawyers managing these transactions will need to be paid as well.
Following is a list of the top unsecured creditors, provided by Borders. (For a slightly longer list, see here.)
The top creditors are all publishers, and their losses are the books now sitting in Borders stores-that Borders never paid for. There are some non-print media companies with big losses too, like Sony (NYSE: SNE) Music and 20th Century Fox. The only creditor in the top 15 that’s not a content company or a book distributor? That would be Seattle’s Best Coffee, the Starbucks (NSDQ: SBUX) subsidiary that ran the cafes in many Borders stores.
These parties have different versions of what they’re owed, which is common in bankruptcy. The list below reflects the values submitted by Borders’ attorneys. But the companies owed money here often believe they’re owed more. For example, Borders admits to owing Penguin a bit over $41 million; in the claim Penguin filed with the court, the publisher says it’s owed almost $45 million. Similarly, Seattle’s Best Coffee says they’re owed just over $7 million, while Borders puts the numbers at below $5 million.
There are some important claims that aren’t on this list, such as the $7.2 million in taxes and interest that New York State says it’s owed by Borders. The State of Illinois also has a claim for $1.8 million in back taxes, as well as legal fees that raise its claim to an estimated $6 million.
Penguin Putnam Inc:: $41,118,914
Hachette Book Group USA: : $36,879,656
Simon & Schuster:: $33,757,445
Random House: $33,461,062
Harper Collins: $25,793,451
Macmillan / MPS: $11,434,306
John Wiley and Sons: $11,191,435
Perseus Distribution Services: $7,776,292
Source Interlink Companies: $6,879,906
Twentieth Century Fox: $6,445,467
Seattle’s Best Coffee: $4,991,818
F&W Media: $4,546,275
Houghton Mifflin Harcourt: $4,400,756
Sony Music: $4,273,824
Workman Publishing Company: $4,003,126