Gottschalks is a regional department store chain that currently operating 58 department stores and three specialty clothing stores in six western states including Nevada, California, Alaska, Oregon, Idaho and Washington. The company was founded by German immigrant, Emil Gottschalk in 1904.

Due to a continued slump in sales Gottschalk Inc. founded in Fresno, California filed for Chapter 11 bankruptcy on January 14, 2009. Gottschalks is planning to hold a court-sanctioned auction which should take place around the middle of March. The company listed $288 million in assets and $197 million debt in the Chapter 11 filing. Gottschalks said it secured a $125 million loan from lenders led by GE Capital to pay employees and vendors and cover other operating costs during its reorganization. The company has almost 5,300 employees. The store continues to operate which in search of a buyer. Creditors have agreed to give the department-store chain until March 24 to sell the company or it will have to liquidate.

Chapter 11 is a bankruptcy reorganization available for some individuals and all types of businesses.MoranLaw: Chapter 11 It allows businesses to maintain possession over their assets while creating a reorganization plan and puts collections and repossessions on hold. Chapter 11 is a very flexible bankruptcy option, but it also has a low success rate.Slate: What Happens in Chapter 11 Bankruptcy?

• "This was a very difficult, but necessary decision."

• "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 Gottschalks Chairman Jim Famalette .