NEW YORK, Sept 26 (Reuters) - A bankruptcy judge gave
Borders Group Inc the go-ahead to sell its customer information
to former rival Barnes & Noble Inc after both sides addressed
concerns about customer privacy.
Judge Martin Glenn approved the $13.9 million deal on
Monday in U.S. Bankruptcy Court in Manhattan, four days after
halting the booksellers' first attempt to gain court approval.
Barnes & Noble won the bulk of Borders' intellectual
property at auction earlier in September. It will inherit the
48-million-member customer database of its one-time rival,
which is going out of business after filing for bankruptcy in
At a hearing on Thursday, Glenn voiced uncertainty about
longer-standing customers and whether the sale would require
customer consent. He held off on approving the deal until he
could be sure state and federal regulators supported it.
The deal announced on Monday gives customers 15 days to opt
out of the transfer by responding to an email that will be sent
when the deal closes, Borders lawyer Andrew Glenn said at
thehearing. A closing date is still uncertain, but the parties
are working to close as quickly as possible, added Glenn, no
relation to the judge.
The companies will split the cost of an advertisement in
USA Today giving customers information on how to opt out, Glenn
information once it is transferred, has agreed to purge any
information it deems unnecessary.
The titles of DVDs and videos purchased by customers will
not be included in the transfer, Glenn added.
Borders and Barnes & Noble had tried to convince Judge
Glenn to approve the deal at last week's hearing, taking issue
with a report by a third-party ombudsman who recommended
certain customers be given the choice to opt out of the sale.
At the time, the companies argued the sale met privacy
standards because Barnes & Noble is a sophisticated company in
the same business as Borders, with its own robust privacy
The ombudsman, Michael St. Patrick Baxter, said on Monday
he supports the latest terms and that he has not received any
objections from the Federal Trade Commission or from state
Borders has sold assets and conducted store-closing sales
since July, when it announced it would liquidate after a
proposed sale to buyout firm Najafi Cos fell through.
Once the nation's second-largest book retailer, Borders
could not withstand rising competition from online booksellers
and from makers of e-readers such as Barnes & Noble's Nook and
Amazon.com Inc's Kindle.
The IP auction raised a total of $15.8 million for Borders
from multiple bidders, some of which bought licenses to use the
IP in other countries.
The case is In re Borders Group Inc, U.S. Bankruptcy Court,
Southern District of New York, No. 11-10614.
For Borders: Jeff Gleit and Andrew Glenn of Kasowitz,
Benson, Torres & Friedman LLP
For Barnes & Noble: Paul Zumbro, Cravath Swaine & Moore
(Reporting by Nick Brown)
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