Gottschalks files for Chapter 11 protection

FRESNO, Calif." Retailer Gottschalks Inc. says it put itself up for sale and has filed to reorganize in a Chapter 11 bankruptcy.

The Western department store chain has a store in Carson City, the only location in Nevada.

Gottschalks 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 a $125 million 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 company reorganizes.

"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.

Gottschalks, based in Fresno, Calif., operates 59 department stores and three Village East specialty clothing stores in California, Washington, Alaska, Oregon, Nevada and Idaho. Its largest market is California, where it has 38 stores.

Its largest creditors include Liz Claiborne Inc., The Estee Lauder Cos. and Jones Apparel Group Inc.

A wave of bankruptcy filings and store closings is expected following the disastrous holiday shopping season. Struggling regional department stores, squeezed by discounters and national players like Macy's Inc., are expected to be among the hardest hit.

Hayward, Calif.-based Mervyns LLC, which filed for Chapter 11 bankruptcy protection in July, is now liquidating inventory at its remaining 149 stores and winding down its business.

Reading, Pa.-based Boscov's Department Store LLC filed for bankruptcy reorganization in August. Analysts say they are monitoring the York, Pa.-based department store chain Bon-Ton Stores Inc., which has also been struggling.

National chains that have been hammered include Circuit City Stores Inc., which filed for bankruptcy protection in November, said last week it's in talks that could result in a sale or additional financing. Toy seller KB Toys, which filed for bankruptcy in

December, is liquidating its stores and will shut down. Goody's Family Clothing announced on Jan. 6 that it was liquidating and on Tuesday it filed for bankruptcy protection.