There was a chance Gottschalks was going to have to announce its liquidation Thursday. But a Chinese government-owned conglomerate that wants to keep Gottschalks open leapt into the bidding for the Fresno department store chain.
That means when the auction begins Monday, there's a chance the retailer will survive. But the Chinese firm, a retailing and real estate firm called Shandng Commercial Group General Corp., will have to outbid two liquidating groups. One of the liquidating bidders, a group including Great American Group, has the upper hand because it's been designated lead bidder or "stalking horse."
That means it gets paid a breakup fee of about $1 million of it loses the auction. That's not a trivial sum as these things go.
Great American was the lead bidder in the Tower Records bankruptcy auction in 2006 and won a two-day auction for Tower's assets, outbidding the owners of the FYE record store chain. The going-out-of-business sale began the next morning.
Another parallel with the Tower story: Gottschalks and Tower employed the same bankruptcy law firm in Delaware, Richards Layton & Finger. As in 2006, Monday's auction will be held at the firm's office in downtown Wilmington, about two blocks from U.S. Bankruptcy Court.
We should know the outcome of the Gottschalks auction Monday or Tuesday. Stay tuned.