Borders deal falls apart

NEW YORK (AP) – Borders Group teetered on the brink of liquidation Thursday after an offer from a private-equity investor disintegrated.

The bookseller appeared to have found its white night in Najafi Cos. back in July, when the private-equity investor from Phoenix offered $215 million for the company, plus the assumption of $220 million in debt.

But on Wednesday creditors objected, saying that the agreement would not prevent Najafi from taking possession of the company and liquidating it immediately for profit.

Creditors said a bid from liquidators Hilco Merchant Resources and Gordon Brothers is stronger. They believe it would pay out between $252 million and $284 million in cash.

That offer should be the primary, or “stalking horse” bid, instead of the one from Najafi Cos., creditors said.

Creditors said in a court filing that they were hopeful Najafi would submit a higher bid, but Najafi stood by its original offer.

On Thursday, Borders said it wouldn’t seek approval for Najafi’s bid in a hearing scheduled for 10 a.m. in the U.S. Bankruptcy Courth Southern District of New York and designated the liquidators as the “stalking horse” bid.