The liquidation of Borders Group Inc. began July 22 after the book retailer won sale approval a day earlier.

Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved the sale of Borders' inventory to a consortium of liquidators after various objections against the sale from Borders' landlords were resolved.

Word surfaced during the sale hearing that Books-A-Million Inc. was in negotiations to buy up to 35 of the outlets. The Birmingham, Ala., company, the third-largest book retailer in the U.S., was to buy 30 stores and have the option to acquire another five. It planned to purchase the stores' inventory through the debtor's liquidators under the same cost structure as the liquidation agreement and assume the stores' leases, debtor counsel Andrew Glenn of Kasowitz, Benson, Torres & Friedman LLP said during the July 21 sale hearing.

Books-A-Million announced Monday, however, that talks had "ended unsuccessfully because the parties could not agree on terms and the going-out-of-business sales at these locations commenced."

Books-A-Million wanted to get the deal done before the GOB sales started so that it could get the stores intact, according to the lawyer for the buyer, J. Douglas Bacon of Latham & Watkins LLP. Books-A-Million sought superstores in Bangor, Maine; Atlantic City, N.J.; and San Diego, as well as superstores and smaller outlets in Pennsylvania and other states, Glenn said.

The debtors hadn't yet obtained approval from its official committee of unsecured creditors for the Books-A-Million sale.

"The unsecured creditors' committee has been a pretty good policeman of any deal that is going to get done in this case," Judge Glenn said during the hearing.

Unsecured creditors' counsel Bruce Buechler of Lowenstein Sandler PC said the unsecured creditors had "very serious concerns" and wanted to make sure that the estate received an adequate price for the sale.

According to Buechler, the committee wanted to have a firm handle on the details of the deal before knowing if it would or wouldn't support the transaction.

Through the liquidation agreement, meanwhile, Borders will receive 72% of the cost value of its merchandise. The cost value of the merchandise is between $350 million and $395 million, court papers said.

Borders will also receive 4% of the gross sale proceeds through the agreement. After that, the remaining sale proceeds would be split 50-50 between the debtor and liquidators Hilco Merchant Resources LLC, SB Capital Group LLC, Tiger Capital Group LLC, Gordon Brothers Retail Partners LLC and Great American Group LLC. Borders anticipates the liquidation sales will conclude by the end of September.

According to court filings, the sales are expected to generate a minimum of $252 million and up to $284 million in cash. The debtor's intellectual property, real estate leases and others assets will be sold separately.