Gottschalks Inc. will be back in Delaware bankruptcy court today, this time to get approval for a consortium of liquidators to wind down its operations.
This story first appeared in the April 1, 2009 issue of WWD. Subscribe Today.
The winning bid for the 105-year-old firm was from liquidators Great American Group, Tiger Capital Group, SB Capital Group and Hudson Capital Partners. The group outbid two other parties for the Fresno, Calif.-based firm on Monday night.
Lawrence Gottlieb of Cooley Godward Kronish LLP, which represents unsecured creditors, said the consortium won the bid at 98 percent of the cost of inventory, which wasn’t specified. He said it was too soon to tell how much creditors might get in recovery, but noted “we now expect that there will be a distribution to unsecured creditors.”
Presuming court approval is received, going-out-of-business sales could start as early as Thursday and are expected to conclude by July 15, according to Gottschalks.
Jim Famalette, Gottschalks’ chairman and chief executive officer, said, “Despite all our efforts at earnest negotiations, we were unable to reach an agreement with our creditors, lenders and bidders to structure a going concern bid by the court-imposed deadline. Regrettably, liquidation is now the only path for our company.”
Bids were expected from competing liquidator Gordon Brothers, as well as Shandong Commercial Group General Corp., a Chinese retailer that was considered Gottschalks’ last hope to exit bankruptcy as a going concern.
Gottschalks filed for bankruptcy in Delaware in January.
Many of its 58 stores are in California, which has already been hurt by the bankruptcy and liquidation last year of Mervyns. The ascendancy of Kohl’s Corp. in the West also was seen as damaging to the indigenous department store group.
Gottschalks operates 55 department stores and three specialty apparel stores in six Western states.
Next up for Gottschalks is an auction of its leases and retail store sites.