Business Journal: Gottschalks Files For Chapter 11
The department store chain Gottschalks filed for bankruptcy protection Wednesday. The move ends several weeks of speculation that the regional retailer was against the financial ropes.
Wednesday, January 14, 2009
The Fresno-based company — which has four stores in the Sacramento region — will attempt to find a buyer or a deep-pocketed investor, and will reorganize in the meantime under Chapter 11. The company has secured $125 million in funding from several lenders, including financial giant GE Capital, to pay its employees, some vendors and other operating expenses. Now, the 58-store chain will continue to operate and its stores in Davis, Elk Grove, Sacramento and Woodland were open Wednesday. But a bankruptcy judge or a buyer could close or sell some — or all — of the stores, which would greatly affect some of the smaller cities that depend heavily on sales-tax revenue from the retailer. Closures would also affect shopping centers where Gottschalks is a major anchor. Retail analysts warned that the 104-year-old chain could soon file for bankruptcy protection after its December sales declined about 10 percent from a year ago, and the company lost almost $20 million for the first three quarters of the year. Shares of Gottschalks, which have been trading for less than 50 cents during the past five weeks, were delisted from the New York Stock Exchange last year and now trade over the counter.