Gottschalks, the department store chain based in Fresno, CA, will be liquidated after it failed to attract a buyer willing to operate the company going forward. A joint venture of liquidators including SB Capital Group LLC, Tiger Capital Group LLC, Great American Group LLC and Hudson Capital Partners LLC has been formed and subsequently won the auction for the assets of Gottschalks, Inc.
The results of the auction are subject to bankruptcy court approval. Going-out-of business sales at the chain are expected to begin on or around April 3. In January, Gottschalks put itself up for sale and at the same time filed to reorganize under Chapter 11 bankruptcy protection after a deal with Everbright Development Overseas Ltd. to invest up to $30 million in exchange for a stake in the company failed to materialize.
The department store chain listed assets of $288.4 million and debts of $197.1 million. As of March 3, the company operated 58 department stores and three specialty apparel stores in six western states, including California and Washington.
The liquidator group has agreed to guarantee 98% of the cost of the company's inventory, Gottlieb said. The funds can eventually be used to repay the chain's creditors. The liquidators had originally offered to pay 85% of the cost of inventory in their original “stalking horse” bid, but increased their bid during the auction, Gottlieb said. The winning bid represented an increase worth about $14 million from the original bid.
According to the original Chapter 11 Bankruptcy filing in January, Gottschalks largest unsecured creditors include Liz Claiborne Inc., The Estee Lauder Cos. and Jones Apparel Group Inc.