Bankruptcy’s on the table, but stores should stay open: Gottschalks filed for reorganization under chapter 11 bankruptcy protection on Jan. 14. On Jan. 16, a U.S. Bankruptcy Court judge approved a $125 million debtor-in-possession credit plan, which will allow the department-store chain to pay employees and suppliers and fund customer services, such as gift card programs, returns, and exchanges, with help from several large lenders.
In a release to the media, Gottschalks Chairman and CEO Jim Famalette called the filing “a very difficult, but necessary decision.”
“However, we want to assure our employees and loyal customers that Gottschalks will be conducting business as usual,” Famalette said in the release.
The company’s 58 stores will continue to operate as usual throughout the reorganizing process. Still, company management is considering selling the business to a third-party investor or negotiating some other kind of transaction.
In another statement to the media, company representatives said “a combination of uncontrollable factors” led to the decision to file for bankruptcy, including “persistent challenges in the economy and recent unexpected reductions to [the company’s] borrowing capacity.”
Gottschalks operates stores in six western states, including California, Washington, Alaska, Oregon, Nevada, and Idaho. The chain’s Santa Maria branch is at 100 Town Center East.
For more information about Gottschalks and the reorganization process, visit the company website at gottschalks.com.
This article appears in Jan 22-29, 2009.
