Payless ShoeSource Outlines Plan for Store Closures in Bankruptcy Filing
Payless ShoeSource has officially filed for bankruptcy, confirming reports that it was preparing to seek Chapter 11 protection for the second time since 2017.
The retailer, which was founded in 1956 in Topeka, Kan., said on Friday that it would liquidate all 2,500 of its North American stores, saying it plans to keep all stores open through at least the end of March as it undertakes liquidation sales, with the majority remaining open until May. (Payless’ Latin American stores and franchise operations overseas are unaffected.)
In its Tuesday filing with the United States Bankruptcy Court for the Eastern District of Missouri, it revealed further details about the store closings. Payless has enlisted the help of asset disposition firms Great American Group LLC and Tiger Capital Group LLC to aid with the wind-down, following the lead of several other retailers that have gone bankrupt in the past year, including Bon-Ton Stores, Gymboree and Toys R Us. The liquidators also assisted the shoe seller in 2017 when it closed nearly 700 stores before emerging from bankruptcy a few months later.
Despite its apparent recovery at the time, Payless has remained saddled with debt and a physical footprint that its revenue could not support. According to court documents, the company still had about $400 million in loans when it emerged from bankruptcy two years ago, even after cutting its debt load in half.
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“The challenges facing retailers today are well-documented, and unfortunately, Payless emerged from its prior reorganization ill-equipped to survive in today’s retail environment,” chief restructuring officer Stephen Marotta said in a statement.
Payless’ Canadian subsidiaries will seek protection under the Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice, the company said in the filing.
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