The Gottschalks drama seems to be moving toward an unhappy end. Our friends at the Fresno Bee have posted an online story saying a liquidating firm has been chosen as the lead bidder for the department store chain, which is operating in Chapter 11. We've just confirmed the story ourselves.
Having a liquidating firm in the lead position doesn't mean liquidators have wrapped up the deal. Others can outbid the liquidators at an auction set for March 30.
But the lead bidder, also known as the "stalking horse," has the inside track. Someone who outbids the stalking horse has to pay the horse a breakup fee - up to $995,000 in this case, according to court documents. In effect, the Great American team can buy Gottschalks for less money than anyone else. These additional costs can make all the difference at auction time.
The lead bidder for Gottschalks is actually a team of liquidators, including Great American Group of Chicago. You may recall that Great American was lead bidder in the bankruptcy auction for Tower Records in 2006. It emerged victorious in the end, nudging out record store chain FYE. FYE planned to keep Tower open.
We'll have more in Saturday's paper.