Can anyone explain this to me, a few days ago I read this article in the WSJ about how the borders takeover by a PE firm fell apart (couldn't find it again, but here is an article that basically says the same thing:http://www.huffingtonpost.com/2011/07/14/borders-…) because of concerns of the PE firm liquidating it... but because the deal fell apart Borders just got liquidated..
I know I'm probably being stupid here and am missing something, so if someone could fill me in, it'd be much appreciated.
The goal of the corporation is to avoid dissappearing (ie liquidation). They are in liquidation now because there are no remaining bids and the creditors are going to want something.
I didnt follow the deal that closely but it was my understanding that Najafi submitted an initial bid and agreed to operate the company as a going concern rather than liquidate the assets, pay off the liabilities and pocket the difference. From what I understand, Najafi was also in negotiations with various vendors and publishers regarding timely product shipping and payment terms. There was a concern that Najafi was simply going to liquidate and the creditors believed that the Hilco bid would offer the highest proceeds to the creditors. The court elected to designate Hilco's bid as the "stalking horse" bid in an effort to set the bar and entice higher bids.
But what I'm confused about is that if creditors were worried that he'd just liquidate the company- didn't they realize that's what would definitely happen if they nixed the deal?
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