With hard economic times looming over many businesses surrounding campus, the parent company of multiple bookstores has declared bankruptcy to try to save its business endeavors.
Nebraska Book Company of Lincoln, NE wholly owns Hillsborough St. Textbooks and Packbackers locations on Avent Ferry Road and Hillsborough Street. According to the Nebraska Company, the three stores will not close as a result of the bankruptcy.
The company filed June 27 under Chapter 11. According to Raleigh bankruptcy attorney William E. Brewer, companies are allowed to continue to operate under this bankruptcy law, but “under the watchful eye” of the court system.
“A company puts their creditors on the sideline,” Brewer said. “They propose a plan to pay their creditors, not necessarily in full, but to pay them what the bankruptcy court considers to be a fair amount based on their assets.”
Nebraska Book Company said it has reached an agreement to restructure about $450 million in loans and bonds, according to a press release.
“Because there are many holders of our public debt, the most efficient way to implement a full recapitalization of our company is through a proceeding under Chapter 11 of the United States Bankruptcy Code,” the release said.
Brewer said Chapter 11 is quite common for companies that want to restructure, and cited examples such as General Motors and “about every airline that exists.”
The Nebraska Book Company’s press release also took time to attempt to prevent misunderstandings about its intentions.
“[This] process may make some nervous,” the release said, “[but] this recapitalization is great news for our future because it will give us the financial flexibility we need to execute our business plan.”
Although the company said no stores would close—including any of its other 287 stores located nationwide—Brewer mentioned the Kmart Chapter 11 case could prove otherwise.
“Kmart filed a Chapter 11 a number of years ago for the purpose of closing down and getting out of their unprofitable stores,” Brewer said, “and keeping their good stores where they were making money.”
Brewer, who is also president of the National Association of Bankruptcy Attorneys, said given the outcomes of similar bankruptcy cases, it would not be surprising for the Nebraska Book Company to selectively close some of its stores.
The textbook industry is changing fast, with rental services becoming more popular among students and professors. Once restructured, Nebraska Book Company said it intends to follow market trends.
“We have launched a new business strategy—rent-every-book. Rental is taking the industry by storm and we are already seeing great results from our stores,” the press release said. “This is the most strategic move our company has made in many years.”
Note: All three bookstores—Hillsborough St. Textbooks and both Packbackers locations—refused to comment on this information, and referred the Technician to the parent company’s marketing center in Nebraska. All calls to the marketing center went unanswered.
