Fashion

Payless ShoeSource enters bankruptcy for the second time


Payless ShoeSource enters bankruptcy for the second time

New York – The US-based affordable footwear chain filed for
bankruptcy protection on Monday. The previous day Payless ShoeSource
had started the shutting down of its 2,500 U.S. stores. About 400 more
will be closed across Canada, according to the Chapter 11 filing.

The liquidation will not impact its franchised or Latin American
stores, where it is the region’s largest specialty footwear retailer.
Payless said in court documents that is looking to reorganize its
Latin American and franchise businesses, which include looking for
capital to support those businesses.

Stores outside North America were not included in the Chapter 11
filing and will continue operations, the retailer added. As published
by Reuters, Payless said it intends to seek protection for its
Canadian subsidiaries under the Companies’ Creditors Arrangement Act
(CCAA) in the Ontario Superior Court of Justice.

Second bankruptcy in less than two years for Payless ShoeSource

It’s worth recalling that the struggling retailer filed for Chapter
11 bankruptcy protection a first time in April 2017, closing hundreds
of stores as part of its reorganization. Back then, reported the CNBC,
it had over 4,400 stores in more than 30 countries.

Marotta noted that the prior Chapter 11 proceedings left the
company with too much debt and with too many stores. As a matter of
fact, it emerged from restructuring four months later with about 3,500
stores and having cut down their debts by 435 million dollars.

“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,” said Stephen
Marotta, the company’s chief restructuring officer, in the
documentation filed with the bankruptcy court earlier this week. The
company further said in court documents that many of its stores did
not generate enough cash to support the costs of sourcing, design and
merchandising.

Image:Payless ShoesSource. Courtesy of Bentley Mall



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