Gottschalks Filed Chapter 11 Bankruptcy

January 15, 2009 12:34:14 AM PST
Fresno based Gottschalk's is seeking protection from its creditors, struggling to stay alive in a very tough economy. The retailer filed for chapter 11 bankruptcy Wednesday and is up for sale. -----------------------------------------------------------------------------------------------
Gottschalks Chapter 11 Filing Documents (PDF)
Gottschalks Customer Service Filing (PDF)
Gottschalks Employees Filing (PDF)
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Gottschalk's planted its roots in the valley long ago so after hearing of the company's bankruptcy, shoppers said they're hoping for the best. "I hope somehow they reorganize and find a way to stay in business," said Ramiro Gutierrez of Madera.

In the bankruptcy filing, Gottschalks said its debt is now $197 million dollars. It has negotiated a $125 million dollar "debtor in possession agreement" with lenders to keep its stores open as it looks for another buyer. "The next step for us which I can assure you, we are working on 24/7, is to find a buyer so we don't have to close the company down and lose the 5,000 employees plus the families," said board member Joe Penbera.

Court documents show the company's biggest creditors include Liz Claiborne, which is owed more than $2 million dollars. Locally, the Fresno Bee is owed $354,000. In the filing, the company is also asking to maintain its customer rewards programs, including more than $6 million dollars in gift cards that have yet to be redeemed. The company says despite the filing, it will be business as usual for now and no layoffs are planned.

But a Howard Davidowitz, a national retail analyst, says the retailer will probably end up suffering the same fate as Mervyn's and Linen's N Things: liquidation. "The consumer doesn't need another sweater. They don't need to enhance their house. They're in survival mode. They're buying cheap food at Wal-Mart and Family Dollar," said Davidowitz.

If Gottschalks does fail, the effects on local communities could be devastating. "We encourage people to shop locally and keep our taxes here to support our city so we're hoping Gottschalks will be able to stay around for a while," said Fran Blackney of the Clovis Chamber of Commerce. Clovis' Sierra Vista Mall is already down one anchor store after Mervyn's closed last month. And if Gottschalks goes, only Sears will remain. The same can be said for Manchester Center.

Gottschalk's is hoping to find a buyer within the next 45 days. If they do not find a buyer within 60, they may have to liquidate.

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