US-based footwear retailer Payless ShoeSource has filed a voluntary petition for reorganisation according to Chapter 11 of the US Federal Bankruptcy Code.
The company’s filing in the US Bankruptcy Court for the Eastern District of Missouri in St Louis aims to facilitate the financial and operational restructure, which involves the closure of nearly 400 underperforming locations in the US and Puerto Rico.
Payless’ restructuring plan includes its North American entities and two foreign Hong Kong-based entities involved in logistics (CBL) and supply chain (DAL).
Payless ShoeSource CEO Paul Jones said: “This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify.
“While we have had to make many tough choices, we appreciate the substantial support we have received from our lenders, who share our belief that we have a unique opportunity to enable Payless, the iconic American footwear retailer with one of the best-recognised global brands, to remain the go-to shoe store for customers in America and around the globe.”
Separately, the company is also filing for recognition of the US Chapter 11 proceedings under Part IV of the Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice.
The company has also entered into a plan support agreement (PSA) with parties who control about 2/3 of its first lien and second lien term debt in a bid to reduce its debt load by almost 50% and provide a path for quick emergence from Chapter 11.
Payless proposes to use the Chapter 11 process to invest in areas such as omnichannel expansion, product and inventory initiatives, and international expansion in areas that would provide sustainable growth.
Image: Payless ShoeSource store at Briarwood Mall, Ann Arbor, Michigan. Photo: courtesy of Dwight Burdette via Wikipedia.