Gottschalks Inc. intends to find a buyer by mid-March or it might proceed with a complete liquidation of its assets, according to court papers filed by the bankrupt department store operator.

The retailer, whose operations include department stores in Antioch, Stockton, Tracy, Santa Rosa and Capitola, said it hopes to complete an auction by March 17 that would lead to a sale of the company. Fresno-based Gottschalks operates primarily in malls located in suburban and rural markets in California, Washington, Oregon, Nevada, Idaho and Alaska.

Absent a buyer, Gottschalks would move toward a liquidation during the spring, company filings with the U.S. Bankruptcy Court in Delaware shows.

Gottschalks listed $197 million in debts and $288 million in assets in its bankruptcy filing on Jan. 14.

"The very weak retail and credit environment" triggered the bankruptcy filing, J. Gregory Ambro, chief operating officer of Gottschalks, stated in an affidavit that accompanied the filing.

For the 2008 fiscal year that is scheduled to end Jan. 31, Gottschalks generated revenues of $557 million and a loss of approximately $12 million before taxes, depreciation and amortization.

The revenues in fiscal 2008 were down 11 percent from the year before. In fiscal 2007, Gottschalks earned $5.5 million before taxes, depreciation and amortization, the company stated in the court documents.

The bankruptcy filing, especially in the current grim retail and economic environment, wasn't a big shock to industry watchers, said Stevan Buxbaum, executive vice president of Agoura Hills-based Buxbaum Group, a retail consulting and management firm.

"Gottschalks is sort of like that boulder hanging over the edge of a cliff that people drive by and say that one of these days the boulder is going to fall," Buxbaum said. "Then one day the boulder goes over the edge."

Other forces could be at work. The retailer depends on a business model — the department store — that may begin to fade from the economic landscape.

"As a business model, department stores are a dinosaur," Buxbaum said. "Business models do not last forever."

Other department store chains have had to revamp their financing or can command relatively secure niches. Buxbaum noted that Macy's reworked a financing deal. Nordstrom is the upscale choice. Kohl's is a downscale choice. Target and Wal-Mart have strong positions.

"Gottschalks was caught in the middle," Buxbaum said. "They weren't as big as the other players. And at this point, only the largest department stores with economies of scale are able to survive."

The recession compounded the problems, said George Whalin, an analyst with and founder of Carlsbad-based Retail Management Consultants.

"Gottschalks is in secondary markets and the economy is struggling," Whalin said. "There is no simple answer to the problems they face and what they are trying to do."

The company said it is in discussions with multiple potential buyers and investors. General Electric Capital Corp. has agreed to provide Gottschalks with up to $125 million in financing, court records show.

But it's unclear whether Gottschalks can dodge the pitfalls that plagued other retailers. Mervyn's and Circuit City both filed for bankruptcy, but eventually had to stage going-out-of-business sales despite attempts to reorganize their financing through the bankruptcy courts.

"A buyer would help, but finding a buyer is easier said than done," Whalin said. "Circuit City just went through that and had no success."

George Avalos covers jobs, economic development, commercial real estate, finance and oil companies. Reach him at 925-977-8477 or gavalos@bayareanewsgroup.com