Gottschalks to liquidate; close Carson store
April 1, 2009
Gottschalks Inc. said Tuesday that it won’t be able to avoid liquidation, and could begin the process of selling off its remaining merchandise by the end of the week.
The retailer, which sought Chapter 11 bankruptcy protection in January, had hoped to possibly sidestep the action after talking to the Shandong Commercial Group General Corp., a Chinese government-owned conglomerate, about a potential buyout.
“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,” Chief Executive Jim Famalette said in a statement.
Famalette also told the Fresno Bee that he hopes to continue negotiations with Shandong for a post-liquidation revival of Gottschalks in some form.
Inside the Carson City Gottschalks store, employees could be seen huddling in small groups talking about the fate of the company. The employees said they were not allowed to comment to the media.
Shoppers were saddened by the loss of another store in the Carson City area.
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“I feel bad because there’s not that much shopping in Carson,” said Barbara Flanagan, a Carson City resident for 20 years. “Another empty building in Carson City.”
“We heard rumors about it,” said Cindy Walker, who was walking inside the Carson Mall Tuesday with friend Carla Bruntz. “It’s kind of a disappointment, being around for so many years.”
Monica Coleman, owner of The Wedding Emporium that just moved into the mall earlier this year, said they were going to miss Gottschalks.
“It’s been a part of Carson City for quite a while,” she said.
However, Coleman said she was optimistic for the mall’s future.
“It’s a little bit of a setback, but there are other stores that could find it desirable to come in here,” Coleman said.
Coleman said mall owner Francis Carrington said, “if Gottschalks closes, there are other things that can go in there, and it would open new doors for this mall. So we aren’t too worried about it. Hopefully it will continue to create a buzz and get people down here.”
Regional retailers such as Gottschalks became particularly vulnerable during the recession because they can’t purchase goods as cheaply as larger retail chains. The Fresno, Calif.-based company had assets of $288.4 million and debts of $197.1 million, according to its January bankruptcy petition.
Gottschalks’ assets will be purchased by a consortium of buyers that includes liquidation specialists SB Capital Group LLC of New York, Tiger Capital Group LLC of Boston, Great American Group LLC of Los Angeles and Hudson Capital Partners LLC of Massachusetts.
The proposed liquidation still needs approval from the Bankruptcy Court for the District of Delaware, which will hear the case Wednesday. The liquidation could start Thursday if approved and is targeted to end by July 15.
Gottschalks, founded in 1904, runs 55 department stores and three specialty apparel stores in California, Washington, Alaska, Oregon, Nevada and Idaho. It has 5,200 employees.