Borders Group Inc. (BGP) said Sunday evening that it delayed more payments to vendors, and this time around also didn't pay some landlords and "others" it owes, as the troubled bookstore chain hovers precipitously between a highly conditional rescue financing and bankruptcy protection.

Borders has been selectively skipping payments to certain vendors since at least the end of December, and has over the past month closed a warehouse, parted ways with a pair of executives and trimmed headcount at its Ann Arbor, Mich., headquarters, to name just some of the tough choices the struggling retailer has faced. It said last week that it secured a financing commitment from General Electric Co.'s (GE) GE Capital arm, but the financing is contingent on several, far-from-certain events, and Borders added that its circumstances dictate that it continue to evaluate other alternatives, including an "in-court" restructuring.

Sunday marked the first time Borders said landlords and "others" would also share in its woes. This news, which it said will "maintain liquidity while it seeks to complete a refinancing or restructuring of its existing credit facilities and other obligations," shouldn't shock; one of the conditions of the GE Capital financing is that Borders finalize a store closure program that sees it identify and close underperforming stores "as soon as practicable."

As of the last time Borders disclosed its store count, it operated 507 Borders superstores, plus 169 other stores under the mostly mall-based Waldenbooks and Borders Express brands, plus stores in several airports.

In addition to the store closures, before GE Capital grants the $550 million senior secured credit facility, one or more other institutions will have to syndicate out $175 million of the loan, plus Borders will need to secure another $125 million of junior debt financing from vendors and other lenders. And vendors, landlords and other will need to agree to "supporting financing arrangements" that GE Capital approves.

At least two book publishers told The Wall Street Journal last week that they wouldn't accept interest-bearing promissory notes in exchange for missed payments.

Lastly, even if all the other conditions are met, GE Capital still needs to conduct "business, financial and legal due diligence," and Borders can't have any material adverse changes come along between now and then.

These developments are likely trying for tobacco magnate Bennett LeBow, who infused money into Borders last year to become its largest holder on a fully diluted basis and installed himself as the chairman and chief executive. Also potentially on the hook is prominent hedge-fund chief William Ackman, who was Borders largest holder before LeBow, and could lose most or all of the roughly $160 million his Pershing Square Capital Management has spent on Borders stock over the years.

Ackman once invested heavily in larger rival Barnes & Noble Inc. (BKS) and unsuccessfully pushed for a combination of the booksellers. He recently suggested he would help finance a takeover of Barnes & Noble by Borders, despite Borders's struggles, but last week in a CNBC television interview Ackman quipped that the best Borders strategy now might be to sell the stock short.

"I assume they are negotiating with publishers, while preparing to file if necessary," Ackman said in an e-mail. "Nothing new."

Borders spokeswoman Mary Davis declined to comment beyond the press release, and the typically tight-lipped LeBow couldn't be reached.

Shares of Borders closed up 4 cents, at 85 cents on Friday.

-By Maxwell Murphy, Dow Jones Newswires; 212-416-2171; maxwell.murphy@dowjones.com
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