Payless ShoeSource Worldwide last night filed for Chapter 11 bankruptcy protection following an announcement that it would be closing all of its 2,500 U.S. stores, including 20 in Fairfield County and the Westchester/Hudson Valley region.
According to the filing made in U.S. Bankruptcy Court of the Eastern District of Missouri, the Topeka-based shoe retailer has between 50,000 and 100,000 creditors with the top 50 creditors having total unsecured claims of $79.6 million. The company has estimated assets of between $500 million and $1 billion, with estimated liabilities in the same monetary range.
Store closings will begin at the end of March and many stores will remain open through the end of May, as it conducts liquidation sales in the U.S. and Canada. Canadian subsidiaries will also be seeking protection pursuant to the Companies”™ Creditors Arrangement Act in the Ontario Superior Court of Justice.
Payless”™ retail operations outside of North America, including its company-owned stores in Latin America, are separate entities and are not included in the Chapter 11 filing; the company will cease retail operations in Puerto Rico.
“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, who was appointed chief restructuring officer in January.
“The prior proceedings left the company with too much remaining debt, too large a store footprint, and a yet-to-be realized systems and corporate overhead structure consolidation. As a consequence, despite our substantial efforts, we were ultimately unable to operate the North American retail and e-commerce operations on a sustainable basis.”
The bankruptcy proceeding follows closely the closing of other major retailers’ stores including Macy’s, Sears, Kmart and Charlotte Russe.
“The liquidation of Payless Shoes is just one in a series of multihundred-unit retail chains shutting down,” said Howard Greenberg, president of Howard Properties Ltd. in White Plains.
“It will affect landlords of major malls, suburban strip shopping centers and urban storefronts, including approximately 20 stores in the Westchester/Fairfield market. After downsizing by almost 700 stores during a previous bankruptcy, the remaining 2,100 stores will shutter due to a combination of competition from stronger players such as DSW, Nordstrom Rack and others, as well as shopper preferences to shop for multiple items at the same time, rather than a single item in a one-product store. Shoppers want name brands and convenience, and Payless was apparently not providing either.”
Payless is seeking authorization from the bankruptcy court to continue to honor gift cards and store credit until March 11 and to continue to allow returns and exchanges of applicable non-final sale purchases made prior to Feb. 17, until March 1. Payless has discontinued its rewards programs and any outstanding merchandise coupons in North America, effective immediately.
The discount shoe retailer announced on Saturday that it would cease accepting orders on its Payless.com e-commerce site. Payless had closed 673 stores in 2017 when it filed for bankruptcy protection.
In Fairfield County, Payless has two stores in both the Stamford and Trumbull markets plus single store outposts in Bridgeport, Danbury, Norwalk and Stratford. Across the border in New York, the Newburgh, White Plains and Yonkers markets each have two Payless stores, while single store outposts in Mount Vernon, Nanuet, New Rochelle, Poughkeepsie and Yorktown Heights.
Additional information regarding Payless”™ Chapter 11 filing will be available at payless.com/restructure.
Staff writer Bob Rozycki contributed to this report.
