The Wall Street Journal reported yesterday that Borders Group Inc. was halting payments to some suppliers, and that one publisher had stopped shipping books to Borders.  The end is near.  As we discussed in an earlier post, if trade creditors lose faith in a company, bankruptcy is almost unavoidable.  The term we use is “confidence sensitive cash flows,” which includes, in addition to trade credit, short term borrowings like commercial paper (think Lehman Brothers) and counterparty credit (think Bear Stearns).  Once one supplier stops shipping, they all will stop.

Today, the Wall Street Journal reported that two senior executives had resigned (the General Counsel and the Chief Information Officer).  This is another classic early warning sign.  Let the countdown begin …