Usually when a company files Chapter 11 bankruptcy, there are only a few possible outcomes. 

Sometimes lenders, landlords, and other debt-holders make a financing deal that gives the company more time to pay off its debt. In other cases, those same groups will take an equity position or even take over the company in exchange for forgiving debt.

There are also those sad times when no deal can be reached and the company moves into a Chapter 7 bankruptcy or simply liquidates its assets.

On rare occasions, however, a bankrupt company reaches a deal to be purchased by a rival, or at least another company operating in the same space. When that happens, typically the company to be bought ends up being absorbed into the acquiring company.

In this scenario, the bankrupt company usually sees its brand go away (unless it has a better name than the company buying it, as was the case when Overstock.com bought Bed Bath & Beyond). 

The acquiring company might keep some aspects of the brand it bought, but usually it’s buying customers, already-built stores, and maybe some residual goodwill.

Books Inc. makes a different Chapter 11 deal  

Books Inc. filed for Chapter 11 bankruptcy earlier this year. At the time, the company painted a fairly bleak picture. 

Books Inc. debt and assets:

• Inventory value: Approximately $2.5 million, including $1.9 million in returnable trade books
• Cash on hand: Roughly $550,000
• Secured debts: Around $1.75-$1.8 million
• Unsecured debts (e.g., owed to publishers and others): Approximately $3 million, including unpaid state sales tax

Source: Court filing.

Barnes & Noble, however, stepped in on Sept. 7 and filed a motion with the U.S. Bankruptcy Court, Northern District of California (Oakland division) to purchase the company for $3.25 million. 

If the court approves that deal, it will be a rare bankruptcy sale to a competitor when the purchased chain gets to keep its identity.

Books Inc. will become a part of Barnes & Noble 

Books Inc. shared the news on its website. 

“In order to successfully exit Chapter 11, we are being acquired by Barnes & Noble, subject to the approval of the Bankruptcy Court,” the company posted. 

What that means, according to Books Inc.

• We will remain Books Inc. We’ll continue to be locally run, keeping our name, stores, culture, leadership, and booksellers you know and love.
• Books Inc. gift cards will continue to be honored.
• You will have the opportunity to transfer your rewards points, preferences, and information into our new system, so nothing you’ve earned will be lost.
• Book clubs, author events, and community gatherings will continue as an essential part of who we are.
• We plan to have a brief period during which our stores are closed for renovation.
• Gift cards will be honored by the new owner.

Nine of the chain’s 11 locations will remain open under the terms of the deal. 

“This agreement will ensure that Books Inc.’s legacy will continue for the foreseeable future. With Barnes & Noble’s deep resources and world-class support, Books Inc. will be able to quickly modernize its operations so we can focus on what we do best: connecting people with books, ideas and each other,” the company shared in a statement to RetailDive.

Books Inc. timeline:  

• 1851: Founded in Shasta City, California, during the Gold Rush as a book and stationery shop.
• 1857: Relocated to San Francisco after a fire destroyed the Shasta store.
• Late 1800s-1900s: Operated under the name Cunningham, Curtiss & Welch, later evolving into Books Inc.
• 1906: San Francisco earthquake and fire destroyed the store; rebuilt afterward.
• Mid-1900s: Expanded into a prominent West Coast bookseller with multiple locations.
• 1990s: Aggressive expansion led to financial trouble.
• 1995: Filed for Chapter 11 bankruptcy after overextending.
• 1996: Barnes & Noble purchased several Books Inc. locations as part of its first bankruptcy restructuring.
• 2000s-2010s: Regrew gradually in the Bay Area, often opening in spaces vacated by Borders and other chains.
• 2020: Survived the Covid pandemic with a shift to online sales and strong community support.
• 2025: Operates multiple Bay Area locations, maintaining its legacy as “the West’s Oldest Independent Bookseller.”

Related: Another shoe and boot brand files for Chapter 11 bankruptcy