Friedland Quoted in Chicago Daily Law Bulletin Article, "Bankruptcy attorneys question fate of Borders' leases"

Jonathan Friedland was quoted in the July 25, 2011 Chicago Daily Law Bulletin article, "Bankruptcy attorneys question fate of Borders' leases."  Borders announced last week that it's reorganization plans had collapsed, following a failed attempt to secure a $215 million dollar bid from Najafi Cos.  The company has since received approval from the U.S. Bankruptcy Court of the Southern District of New York to appoint liquidators to sell off its assets and to launch its going-out-of-business sales.  As the article explains, under the bankruptcy code, the debtor has the "right to walk away from a lease, leaving the landlord with an unsecured claim in the bankruptcy."  So, the question now is, what happens to all of Borders' leases?

In the article, Friedland argues that competing retailers might pass on Borders' leases if they can find cheaper rent prices elsewhere.  "Let's say you're Books-a-Million Inc., or you're selling something else, and you want that space," Friedland said. "In order to get 200 or 300 leases below-market rent, it might make more sense to buy everything at once in what looks like more of a going concern sale."  However, he goes on to explain that "in today's market, chances are that a retailer can go directly to a landlord and the rent they can pay today is lower than Borders' locked-in lease."

Friedland believes that Borders followed the path of other retailers who couldn't adapt to change.  "The idea that a big retailer is going to hire liquidation firms to conduct going-out-of-business-sales in their stores — that is the story of every large retail case," he said.