Gottschalks is reportedly in talks with a trio of potential buyers to continue to operate the retail department store chain, a financial news service reported Thursday evening.
Citing unnamed sources, Bloomberg.com reported that the Fresno-based company is negotiating with El Corte Ingles, a Spanish retail giant that already owns a 16% stake in Gottschalks, Golden Gate Capital Corp, a California private-equity firm, and GK Development Inc., a development company in Illinois. According to the Bloomberg report, the three companies would continue operating some of the chain’s locations.
Gottschalks, which operates 58 department stores, including one in Merced, in six western states, filed for bankruptcy in mid-January and is due to be sold at auction on March 30. The company announced this month the selection of a consortium of liquidation companies as a lead bid to conduct going-out-of-business sales if no alternate bidders surface by March 25.Quantcast
James Famalette, Gottschalks’ chairman and chief executive, said Thursday night that he was unable to comment on the Bloomberg report. “Anyone that we’re talking with has to remain confidential right now,” he said.
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In an e-mail earlier Thursday, Famalette said only that the company is “still in serious discussions with more than one group about a going-concern bid.”
Bloomberg reported that while the three companies signed confidentiality agreements to examine Gottschalks’ financial records, none have committed to bid in the March 30 auction.
When Gottschalks filed for Chapter 11 bankruptcy protection on Jan. 14, it expressed a preference to sell itself to a buyer who would continue to operate the 104-year-old chain. But under its terms with creditors who are extending $125 million for Gottschalks to continue operating during bankruptcy, it was obligated to select a potential liquidation bid as well.
El Corte Ingles already owns a significant stake in Gottschalks as a result of a 1998 deal in which the Spanish company sold its Harris department stores in Southern California to Gottschalks. In its bankruptcy filing this year, Gottschalks listed The Harris Co., a unit of El Corte Ingles, as its largest unsecured creditor, holding a note for about $16.1 million.
Each member of the consortium of liquidators that make up the lead bid — SB Capital Group of New York, Tiger Capital Group of Boston, Great American Group of Los Angeles and Hudson Capital Partners of Massachusetts — has been involved in several other recent high-profile retail bankruptcy liquidations, including Mervyns, Circuit City and Linens N Things.