GOTTSCHALKS TO LIQUIDATE ASSETS

Gottschalks Inc. said that it won't be able to avoid liquidation and will sell merchandise and other items at its retail stores and distribution center.

The retailer, which sought Chapter 11 bankruptcy protection in January, had hoped to possibly sidestep the action after talking to the Shandong Commercial Group General Corp., a Chinese government-owned conglomerate, about a potential buyout.

"Despite all our efforts at earnest negotiations, we were unable to reach an agreement with our creditors, lenders and bidders to structure a going concern bid by the court-imposed deadline. Regrettably, liquidation is now the only path for our company," Chief Executive Jim Famalette said in a statement.

Regional retailers such as Gottschalks became particularly vulnerable during the recession because they can't purchase goods as cheaply as larger retail chains. The Fresno, Calif.-based company had assets of $288.4 million and debts of $197.1 million, according to its January bankruptcy petition.

Gottschalks' assets will be purchased by a consortium of buyers that includes liquidation specialists SB Capital Group LLC of New York, Tiger Capital Group LLC of Boston, Great American Group LLC of Los Angeles and Hudson Capital Partners LLC of Massachusetts.

The proposed liquidation still needs approval from the Bankruptcy Court for the District of Delaware. The liquidation is targeted to end by July 15.

Gottschalks, founded in 1904, runs 55 department stores and three specialty apparel stores in California, Washington, Alaska, Oregon, Nevada and Idaho. It has 5,200 employees.

This is a sad day for retailers. Another retail institution bites the dust.