EVENING UPDATE - Things are moving quickly at Gottschalks now that its fate — closure at the hands of store liquidators — is all but finalized.
James Famalette, chairman and CEO of the bankrupt Fresno-based department store chain, said today that going-out-of-business sales will begin Thursday or Friday at the company's outlets across the western U.S.
"Obviously this is a very sad day at the office," Famalette wrote in an e-mail from Delaware, where the bankruptcy auction was held Monday and where a judge will approve the winning bid Wednesday morning in a court hearing.
Gottschalks, founded in 1904, operates 58 department stores and three specialty stores in California, Oregon, Washington, Alaska, Idaho and Nevada, and employs about 4,000 people throughout the company, Famalette said.
Liquidation sales -- to be conducted by the same four companies that ran the closing sales for bankrupt retailers Mervyns and Circuit City -- are expected to take between 45 and 90 days, Famalette said.
Most of the employees who work in stores "should be fine until the end of the sale," Famalette said.
But some employees will feel the fallout much sooner. Employees at Gottschalks' corporate headquarters in north Fresno were notified today that Friday will be the last day for most, "except for a small staff needed for the liquidator and wind-down," Famalette said. The announcement affects about 260 of approximately 340 workers at the corporate office.
Fresno-based Gottschalks will cease to operate as a department store chain after a group of liquidators won the bidding for the bankrupt company’s assets, Chairman and CEO James Famalette said late Monday night.
The liquidators were one of three bidders, including another liquidator and a Chinese company, Shandong Commercial Group, that intended to keep some of the stores open.
'We tried as hard as we could to make this work with the Shandong people, but there were too many things financially, with the size of the deal, and regulatory issues, that they just couldn’t get done in time," Famalette said from Delaware.
Famalette said the auction, which began at 10 a.m. Monday, was not concluded until 11 p.m. Eastern time.
"It's very difficult to talk right now," said Famalette, his voice shaking.
He added that Gottschalks, which has two stores in Modesto, would begin notifying employees today about what will happen. "It’s very difficult right now."
Gottschalks has about 5,200 employees in its operations in California, Oregon, Washington, Alaska, Idaho and Nevada.
The auction was held behind closed doors, and results have not been officially announced by the bankruptcy court.
The prevailing bid is due to be approved at a court hearing Wednesday by U.S. District Bankruptcy Court Judge Kevin Carey in Wilmington. Once the order is signed, going-out-of-business sales at Gottschalks stores could start the next day — perhaps as early as late this week.
Also on Wednesday, an auction date is expected to be set to deal with Gottschalks’ real-estate assets: its leases and the store sites it owns.
Just after midnight Eastern time, Women’s Wear Daily and Reuters began filing reports that the liquidators had won the auction. An hour later, Gottschalks issued a release confirming the reports.
Gottschalks filed for Chapter 11 bankruptcy in mid-January in hopes of either reorganizing its debt or finding a buyer.
In the written statement, Famalette said: “Regrettably, liquidation is now the only path for our company. We are deeply disappointed with this outcome and the impact it will have on our employees, customers, business partners and the communities we have served for 105 years.”