Borders U.K. is once again the subject of feverish speculation after it was placed back on the market only four months after it was bought in a management buyout backed by distressed debt specialist Valco Capital Partners.

Publishers spoken to by the Bookseller expressed fears over the future of the chain, after it emerged that one major distributor -- The Book Service Ltd/Grantham Book Services -- had cut off supply over an unpaid bill.

Rumours about the business have mounted since it was reported on Friday (Nov. 20) that both W H Smith and HMV had walked away from possible deals, while an expected deal over the company's website failed to materialise in the week following the departure of its Web team.

Borders' corporate finance adviser Clearwater put an advertisement in the Financial Times on Nov. 17 offering for sale "the assets and trade of a chain of book and entertainment stores", with revenue in the region of £150 million ($249.1 million). It was described as having "prime locations on the high street and 'out of town' retail parks". No asking price was given.

Borders has so far refused to comment either on its future, the sale notice or the problems over supply. But in an email to staff sent late on Friday chief executive Philip Downer said it had "received an unsolicited approach from an interested party," and that it had "retained a corporate finance specialist to investigate future possibilities for the business, in line with best practice."

Downer added that a "further announcement will follow once we have confirmed information to share with you". It has now emerged that the chain's Public Relations have now been switched to City firm Financial Dynamics, which also handles the PR for Valco.

It not clear why the chain's fortunes have reversed so quickly. Barely one month ago Downer set out a positive vision for the business at its annual managers' conference, with a plan to launch a loyalty programme next year and grow its number of stores again after closing four superstores in the summer and continung to exit its Books Etc shops.

Four national newspapers have so far reported that the business is looking to stave off collapse. According to the Guardian, the chain was hoping to sell is 36 outlets to avoid falling into administration, after a near-halving of credit insurance had made it more difficult for it to obtain stock from suppliers. The paper reports: "The company's management is worried that it does not have enough cash to trade successfully through the busy Christmas period."

The Times reports Borders U.K. "is on the verge of collapse this weekend after W H Smith walked away from a rescue deal on Friday. In an attempt to stave off administration, the high street retailer is holding talks with groups including HMV, which owns rival Waterstone's..." It adds: "The business has some headroom on its bank loans, but its management is concerned that it lacks sufficient funds to make it through what is expected to be a challenging Christmas period." The Mail and the Telegraph are running near identical reports.

Both the Guardian and Times point to the fact that its auditor Ernst & Young raised doubts about the chain's ability to continue as a going concern in its financial statements for the year to Feb. 2, 2008, made available at Companies House in August this year. It raised the competitiveness of the high street bookselling trade plus a difficulty in predicting sales performance, as well as uncertainty surrounding the continuing support of suppliers and the availability of credit insurance. Following the management buyout Downer had promised "greater cash flow as we open up a new borrowing line".

It is one year since the collapse of Woolworth's and its distributor Entertainment UK, which hit both publishers' supermarket supply and wholesaler Bertrams, with major publishers now braced for what is turning into a second difficult Christmas.

Borders arrived in the U.K. in 1997 as an offshoot of the American chain, but has changed hands twice in two years after the Americans retreated to shore up their domestic market.