Dallas, Texas-based Payless ShoeSource Inc., an American discount footwear retailer, has announced plans to file for Chapter 11 bankruptcy only two years after its first Chapter 11 reorganization. In its first Dallas bankruptcy in 2017, Payless planned to shed 400 or so underperforming stores to remain viable. Now, however, the national shoe retailer is planning to completely shut down its remaining 2,300 stores as it prepares to file for a second bankruptcy protection.
The Upcoming Bankruptcy
In what many bankruptcy attorneys in Dallas TX are claiming is beginning of the end, Payless ShoeSource has announced that it plans to file for bankruptcy in late February 2019. As part of that announcement, Payless states that it will subsequently close all its remaining locations. Shutting its remaining 2,300 stands to put 3,000 or so workers out of a job. While there is speculation that the company could emerge from the bankruptcy, keeping a small number of locations open, consumers will have to await the bankruptcy restructuring plan filed within four months of the bankruptcy filing.
What Consumers Need to Know
Companies that liquidate their locations and merchandise on the tail end of bankruptcy tend to have large liquidation sales that are open to the public. The potential store closings could be one last chance to get significantly discounted merchandise from the company. If you have any Payless ShoeSource gift cards, now is the time to use them, lest they are worth nothing after the company shuts its doors for good.
Chapter 11 Bankruptcy protection allows businesses to renegotiate its debt obligations to creditors under the federal bankruptcy court. Alternatively, if a company wishes to quickly and efficiently liquidate all inventory and close up shop, it can utilize Chapter 7 bankruptcy. Payless was applauded for exiting bankruptcy in a relatively quick amount of time, as a high percentage of companies are not able to carry out their restructuring plans and fail.
Still other times, they exit bankruptcy only to head back to this form of debt relief later. Payless wouldn’t be the first company to file multiple bankruptcies and remain solvent, but it also wouldn’t be the first company not fully to rebound business after filing chapter 11 bankruptcy either.