Gottschalks on the Brink

March 6, 2009 11:42:09 PM PST
Two months after Gottschalks filed for bankruptcy the Fresno-based retailer filed a notice to liquidate all assets. However, it still leaves the door open for a buyer until the department store chain sells itself at auction March 30th. ABC 30 legal analyst Tony Capozzi says chances of a company making such a buy now are slim. He said, "It may be the beginning of the end. The economy is so bad and down so low it would be very difficult for someone to come in and purchase the stores and the merchandise and the inventory."

Capozzi believes the bankruptcy judge will likely sign off on the liquidation company at next Tuesday's hearing. Court documents indicate that the group Gottschalks hired to liquidate its assets could then start inventory and prepare to sell everything in the 61 stores. The final decision comes the day after the March 30th auction. Fresno State Professor Bill Rice says Gottschalks' failure would be as much of a financial blow to the community as it is psychological.

He said, "The mental equity that we have as far having a national company on the stock market and other things we have now lost that affects how we see ourselves as Fresno."

Chuck Burns of Fresno said, "It's a sad thing especially now that they're starting to attack the distributing point in Madera and we've all know people that have worked for them."

If the deal goes through 5,300 employees will lose their jobs when the stores permanently close their doors July 15th. New York retail analyst Howard Davidowitz told action news we're now living in an era of liquidation and not reorganization. He added, "The only thing that can save them is divine intervention which I don't believe in. There's no jobs the consumer can't pay their mortgages they can't pay their student loans, that's why Gottschalks is where they are." And if Gottschalks fails, he says it won't be the last major retailer to collapse.

Late Friday night Gottschalks CEO Jim Famalette e-mailed action news a statement. He said, "The company is in ongoing talks with several groups who are interested in keeping the stores intact. While there is considerable interest, I am sure you aware, these are very challenging times for obtaining financing for business operations. So we remain encouraged but cautious about the ultimate outcome."

Gottschalks has a few potential buyers but isn't required to reveal who they are until a few days before the March 30th auction.

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