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Borders bankruptcy shakes up book industry

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Mike Blake/Reuters

(Read caption) A sale sign is seen at a Borders bookstore in San Diego, Feb. 16, 2011. The second-largest US bookstore chain filed for bankruptcy protection and said it planned to close nearly one-third of its bookstores, after years of shriveling sales that made it impossible to manage its crushing debt load. The Borders bankruptcy sent a chill through the book industry.

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The bankruptcy of Borders Group has sent a shockwave through the book industry, not because it was unexpected, but because it reshuffles an industry that's already going through a wringer of technological change.

On Wednesday, the Ann Arbor, Mich., based company announced it was filing to reorganize under bankruptcy and would close some 200 of 642 stores around the United States. The immediate effects aren't all negative.

Consumers could see clearance sales begin as early as this weekend. Rival booksellers could pick up new customers as the Border's stores close.

But "it's certainly not a hurrah," says Daniel Goldin, owner of Boswell Books in Milwaukee. "I worry more about the publishing industry.... With a competitor gone, it puts more power in the hands of Amazon. It brings thee players down to two."

The bookstore chain reportedly owes $41.1 million to Penguin Putnam, $36.9 million to Hachette Book Group, $33.8 million to Simon & Schuster, and $33.5 million to Random House.

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