Payless ShoeSource filed for Chapter 11 in April this year

Payless ShoeSource filed for Chapter 11 in April this year

US footwear giant Payless ShoeSource has emerged from Chapter 11 Bankruptcy Protection with "substantial liquidity" after eliminating around US$435m in debt.

Payless filed for Chapter 11 Bankruptcy Protection in April in a move that saw the closure of around 673 stores. The company cited continued retail environment challenges, with the filing covering its North American entities, as well as two foreign Hong Kong-based units involved in logistics (CBL) and supply chain (DAL).

Payless says it has now completed its restructuring and its balance sheet is strengthened, placing the company in a stronger position for the long term.

The private equity-owned company will be led by a newly-appointed executive committee that includes CFO Michael Schwindle, COO Mike Vitelli and led by chairman and interim-CEO Martin Wade.

"In a year where so many major retail companies have filed for Chapter 11 restructurings, Payless is the first to successfully emerge as a stronger and healthier enterprise for the benefit of its customers, employees, suppliers, business partners, and lenders," says CEO Paul Jones, who is set to retire.

"Our new owners believe wholeheartedly in the future of Payless, and I am confident that they will identify a new leader who will complement our outstanding and deeply committed management team, while sparking new ideas and approaches."

The post-emergence board of directors will begin a search for Jones's replacement.

Payless, which had 4,400 stores in 30 countries, comes out of bankruptcy with 3,500 stores.

Its emergence sets the company in a rare class at a time when the outcome for many other struggling retailers has been different. Over the past 18 months, Eastern Outfitters and Wet Seal have been among a number of companies to have launched unsuccessful attempts to restructure, with both filing for Chapter 11 this year, joining the likes of BCBG Max Azria Group, The Limited, and Rue 21.

Those that have managed to restructured through Chapter 11 include Pacific Sunwear of California, and Aeropostale.