The U.K. music industry is keeping a watchful eye over developments at troubled book retail chain Borders U.K. following the company's recent fall into administration - roughly equivalent to Chapter 11 bankruptcy protection (Billboard.biz, Nov. 26).

The stores, which also sell CDs and DVDs, filed for administration yesterday (Nov. 26), although administrators MCR has said that it hopes to sell the company as a going concern. There are 45 Borders and Books Etc stores; 1,150 employees are said to be at risk.

Commenting on the potential cost of another music retail outlet disappearing from the U.K. high street, following the closure of entertainment stores Woolworths and Zavvi earlier this year, Kim Bayley, director general of the U.K. Entertainment Retailers Association, tells Billboard.biz that Borders closure, although regrettable, "would have a fairly small impact" on the overall U.K. music market.

She did, however, warn that any potential closure would "hit sectors like classical music and jazz music slightly more than it hits mainstream pop music because they [Borders] traditionally have a very big part of that market."

According to Bayley, Borders - which is owned by Valco Capital Partners, the private equity arm of restructuring specialist Hilco -- accounts for approximately 1%-2% of the overall U.K. music market.

"I don't think it's [potential closure is] going to make a massive impact," she tells Billboard.biz. "Borders is very much positioned as a book retailer and therefore entertainment has always been a small add-on, generally on the top floor."

Although not a long term solution, Bayley went on to say that any potential loss in music sales resulting from the closure of Borders would be offset by the number of temporary retail outlets that are opening in the U.K. for the Christmas trading period.

Administrators have begun assessing the value of stock held across the entire Borders chain, with assessors from MCR in stores today. A 20% discount offer is being rolled out across Borders stores, with the signage reminiscent of last year's Woolworths wind-down.

As previously reported, HMV, the U.K.'s leading entertainment retailer, opened the first of its temporary Christmas stores in October (Billboard.biz, Oct. 22). Additionally, U.K. computer game retail chain Game recently began stocking a top 20 range from Universal Music and Sony Music in around 200 national stores, as part of a seasonal promotion.