NEW YORK (Reuters) –
U.S. regional department store chain Gottschalks will be liquidated after it failed to attract a buyer willing to operate the company as a going concern, the head of the company's creditors' committee said on Tuesday.
A joint venture of liquidators including SB Capital Group LLC, Tiger Capital Group LLC, Great American Group LLC and Hudson Capital Partners LLC won the auction for the assets of Gottschalks, according to Larry Gottlieb, chair of the bankruptcy and restructuring practice at law firm Cooley Godward Kronish LLP.
The results of the auction are subject to bankruptcy court approval. Going-out-of business sales at the chain are expected to begin on or around April 3, Gottlieb said.
Fresno, California-based Gottschalks filed for bankruptcy protection in January after a failed deal with investor Everbright Development Overseas Ltd to invest up to $30 million in exchange for a stake in the company.
As of March 3, the company had operated 58 department stores and three specialty apparel stores in six western states, including California and Washington.
The liquidator group has agreed to guarantee 98 percent of the cost of the company's inventory, Gottlieb said. The funds can eventually be used to repay the chain's creditors.
The liquidators had originally offered to pay 85 percent of the cost of inventory in their original "stalking horse" bid, but increased their bid during the auction, Gottlieb said.
A "stalking horse" makes the lead bid at a bankruptcy auction and creates a floor for the bidding, in exchange for certain protections that often include break-up fees.
The winning bid represented an increase worth about $14 million from the original bid, Gottlieb said.
The case is In re: Gottschalks Inc, U.S. Bankruptcy Court, District of Delaware, No. 09-10157.
(Writing by Emily Chasan; Editing by Lincoln Feast)