NEW YORK — Department store chain Gottschalks Inc. put itself up for sale and filed to reorganize in a Chapter 11 bankruptcy on Wednesday.
The retailer, which has an outlet at the Marysville Mall, also has stores in other Washington locations and in California, Alaska, Oregon, Nevada and Idaho. It has assets of $288.4 million and debts of $197.1 million, according to its bankruptcy petition filed Wednesday in the United States Bankruptcy Court for the District of Delaware.
Gottschalks has negotiated $125 million in debtor-in- possession financing from a group of lenders led by GE Capital, the company said in a statement. The financing, if approved in bankruptcy court, will fund employees’ wages and benefits, some vendor payments and other operating expenses while the firm reorganizes.
Regional retailers such as Gottschalks, which had about $600 million in annual sales, are especially vulnerable in the economic downturn because they can’t buy goods as cheaply as larger retail chains.
“Persistent challenges in the economy and recent unexpected reductions to our borrowing capacity as a result of tightening credit markets have left us with no other recourse,” said Jim Famalette, chairman and chief executive, in a statement.
Ken Perkins, president of research firm RetailMetrics LLC., said that as shoppers have traded down from mid-tier department stores to hunt for bargains at discounters or hold back spending all together, smaller chains have been hit hardest.
“If you look at those who have had the most difficulty, it has been regional department stores,” Perkins said.
Gottschalks, based in Fresno, Calif., operates 59 department stores and three Village East specialty clothing stores. Its largest creditors include Liz Claiborne Inc., The Estee Lauder Cos. and Jones Apparel Group Inc.
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