Bankrupt book store chain Borders Group Inc. has said it canceled an auction to select a liquidator to close some of its most profitable and high profile stores.

In a filing in Manhattan bankruptcy court, Borders said it was on the verge of reaching a deal to amend the terms of a $505 million bankruptcy financing loan from GE Capital, which obliged the chain to begin store closure sales if it failed to extend lease deadlines with store landlords.

Although the chain has obtained lease extensions for about 90 percent of its 416 remaining stores, it failed to do so for some of its most successful stores, such as the one at Columbus Circle in New York.

The impasse with the remaining landlords meant Borders was at risk of breaching its loan terms with GE Capital, terms under which it pledged to shut down any stores by June 22 for which it had not obtained a lease extension.

In its brief filing Wednesday, Borders said it believed "the parties have reached an agreement in principle" to avoid store closure and the agreement would be finalized "in the very near future."

The case is In re Borders Group Inc, U.S. Bankruptcy Court, Southern District of New York, No. 11-10614.