There are a few interesting paragraphs not included in the earlier GalleyCat post:

We think that the best course for IPG’s client publishers is to accept the option of still shipping to Borders. Borders has been paying IPG, they are reported to have cash on hand and access to credit in the future, and the last thing anyone wants is to have only one giant chain in the retail book market. Borders may prosper, and even in the worst case, given IPG’s uniquely flexible policy, the value of your inventory would be preserved.

On the other hand, booksellers and wholesalers in trouble sometimes resort to tactics that can damage publishers. Sometimes they return books that are selling well and then reorder the same titles. This allows them to start the payment meter over again, but of course it means more damaged copies. Sometimes they order far more copies than they need for the purpose of having more stock in their warehouse to comfort their secured creditors. Sometimes they have no reasonable expectation that they can stay in business, but order books just in case some miracle arrives to save them. We will not allow your titles to become pawns in any such games.

We do not see evidence of this sort of behavior to date at Borders, but we have, for some weeks now, scrutinized every one of their purchase orders, in some cases reducing them to reasonable amounts. Their performance has been erratic. We will continue this vigilance in regard to the titles of publishers who wish IPG to continue to ship them.

GalleyCat has received a copy of a “special alert” sent from a major book distributor specializing in independent publishers to its clients, warning them that Borders, whose financial difficulties are widely recognized, “now tell us that they will not be paying us for two months due to anticipated excessive returns,” a situation the company views with understandable concern. [. . .]

Therefore, the distributor is telling its clients they need to make a decision this weekend: “Publishers must either instruct [us] not to ship their titles to Borders [or] accept the provision that [we], for Borders business only, will guarantee payment only for the publishers’ historical printing cost of books that are not paid for, rather than for the whole amount of any unpaid invoices.” (As the memo explains, the printing cost of a $14.95 paperback is roughly $1.50, compared to the $7.48 the distributor bills Borders.) The new policy is contrasted to what the company says other distributors do, asserting that some of its competitors are refusing to take any credit risk at all on inventory sent to the struggling chain.

Rumors about the coming demise of Borders have been floating around for months. Hopefully this is just a recession induced hiccup and not the beginning of the end . . .