Borders Group Inc. President Mike Edwards said in a written statement that cautious consumer spending, negotiations it was having with publishers and other vendors and a lack of liquidity made it clear Borders "does not have the capital resources it needs to be a viable competitor."
Borders plans to operate normally and honor all gift cards and its loyalty program as it reorganizes.
The company will receive $505 million in debtor-in-possession financing from GE Capital and others to help it reorganize.
According to the filing, Borders had $1.28 billion in assets and $1.29 billion in debts when it filed for bankruptcy protection.
Big-box bookstores have struggled as more people buy books online, in electronic form or at grocery stores or discounters such as Walmart.
Borders also suffered from a series of errors: failing to catch onto the growing importance of the Web and electronic books, not reacting quickly enough to declining music and DVD sales, and hiring a series of CEOs without book-selling experience.
At its peak in 2003, Borders operated 1,249 stores under the Borders and Waldenbooks names, but now it operates barely half that. Its annual revenue has fallen by about $1 billion since 2006, the last year it reported a profit.