The year didn't start out on a high note for Borders executives and shareholders. At the beginning of January, the bookseller was in discussions with publishers about deferring payments, as well as talking to lenders about refinancing its debt. Not only that, Borders began bleeding executives--vice presidents, the chief information officer, and even the general counsel. It was thus expected when the company filed for bankruptcy last week in a Manhattan court.
Borders blames the economic downturn and online competition for its predicament, and plans to close 200 of its 642 stores in the next few weeks. It's hoping that it can run the remaining locations more efficiently and competitively.
Though the Borders bankruptcy was no surprise, the lawyer hired to handle the proceedings is. Borders has chosen David Friedman of Kasowitz, Benson, Torres & Friedman LLP.
Insiders had expected Borders to go with a firm involved in large debtor-side bankruptcy cases, pointing to reports that the company had lined up Jones Day, reports The Wall Street Journal. Instead, the company chose to go with the smaller Kasowitz Benson and a lawyer that is well known for his creditor-side work.
So how did David Friedman get the gig?
Turns out named partner Marc Kasowitz has ties to Ligget Group, purveyor of tobacco, which, according to The Wall Street Journal, is tied to the Vector Group. The Vector Group, Ligget's holding company, is currently chaired by Borders' CEO Bennett LeBow.
It seems the Borders bankruptcy proves yet again that it really is all about who you know.