Payless Shoes made the announcement Tuesday morning April 4th that the company has filed for Chapter 11 Bankruptcy. As a result, the shoe retailer giant will close 400 stores. The following is the list of stores, to include 12 Arkansas stores. According to this release, Benton will NOT lose its store on Military Road. Benton has endured the loss of several retailers on Military Road recently, including Hastings Entertainment, Hibbett Sports and JC Penney. It’s good to be keeping one.
- 1518 S Caraway Rd Jonesboro AR
- Arkansas Shopping Center Hope AR
- Berryville Center Berryville AR
- Twin City Shpg Cntr West Helena AR
- Porters Common Shopping Center Blytheville AR
- 4316 Camp Robinson Rd North Little Rock AR
- Hot Springs Mall Hot Springs National AR
- Park Plaza Mall Little Rock AR
- Valley Park Center Russellville AR
- 2212 N Washington Street Forrest City AR
- 3115 Harrison Batesville AR
- Ozark Mall Outlet Harrison AR
Click for the full list of store closures. Information concerning stores, employees, gift cards and more can be found on a special website set up by Payless at www.paylessrestructure.com.
The following is the full announcement from Payless:
Payless ShoeSource Implements Path Forward to Enhance Company’s Growth Profile and Profitability
TOPEKA, KS, April 4, 2017 – Payless ShoeSource (“Payless,” “the Company”), the largest specialty family footwear retailer in the Western Hemisphere, offering a range of everyday and special occasion shoes and accessory items at affordable prices, announced today that it has filed a voluntary petition for reorganization pursuant to Chapter 11 of the U.S. Federal Bankruptcy Code to facilitate the financial and operational restructuring necessary to strengthen its balance sheet and position the Company for long-term success. The Company’s North American entities, as well as two foreign Hong Kong-based entities involved in logistics (CBL) and supply chain (DAL), are included in the restructuring, which has been filed in the U.S. Bankruptcy Court for the Eastern District of Missouri in St. Louis. Payless is also filing for recognition of the U.S. Chapter 11 proceedings under Part IV of the Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice. Payless will continue to operate its business in the ordinary course in terms of its customers, vendors, partners and employees.
In conjunction with the restructuring, Payless has entered into a Plan Support Agreement (PSA) with parties who hold or control approximately 2/3 of its first lien and second lien term debt to reduce its debt load by almost 50%, materially lower its annual cash interest costs, access significant additional capital and provide a path to an expedited emergence from Chapter 11 with a sustainable capital structure for the future. The PSA demonstrates the strong support of our senior lenders for a consensual restructuring and their conviction in the future of Payless, as well as providing a clear path to emergence on an expedited basis.
Under this agreed plan with its lenders, Payless intends to use the Chapter 11 process to accomplish specific objectives:
Strengthen its balance sheet and restructure Payless’ debt load;
Invest in specific areas that Payless believes will provide sustainable growth including omnichannel expansion; product and inventory initiatives; and international expansion in Latin America and elsewhere; and
Optimize its store footprint, with the immediate closure of nearly 400 underperforming locations in the U.S. and Puerto Rico and work to aggressively manage the remaining real estate lease portfolio either by modifying terms, or evaluating closures of additional locations.
Paul Jones, Payless Chief Executive Officer, commented, “This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify. We will build a stronger Payless for our customers, vendors and suppliers, associates, business partners and other stakeholders through this process. 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-recognized global brands — to remain the go-to shoe store for customers in America and around the globe.”
The Company is promptly seeking immediate relief from the Court though the filing of customary first day motions that will allow the Company to smoothly transition its business into Chapter 11, including, among other things, granting authority to pay pre-filing wages, salaries, benefits, honor customer programs, and pay vendors/suppliers in the ordinary course for all goods and services provided on or after the filing date. Additionally, the Company has negotiated agreements with certain of its existing lenders to provide Payless access of up to $385 million of debtor-in-possession financing, which includes access to $305 million of ABL financing and up to $80 million of new term loan financing. In total, the debtor-in-possession financing will provide Payless with access to up to $120 million in incremental liquidity during the Chapter 11 cases. This incremental liquidity will ensure that suppliers and other business partners/vendors will be paid in a timely manner for authorized goods and services provided during the Chapter 11 process, in accordance with customary terms. The $80 million of new term loan financing will also ensure the Company has the exit financing required to emerge from Chapter 11 well positioned for future growth and profitability post-restructuring.
“We are confident that this process will also enable us to leverage Payless’s existing strengths to succeed,” continued Mr. Jones. “These strengths include our ability to produce significant free cash flow and, even last year, flat EBITDA despite unprecedented challenges and in contrast to many retailers; our portfolio of strong proprietary brands, along with unique licensing agreements with premier brands and partners; our best-in-class design and sourcing capabilities that enable the Company to offer customers high quality products at a significant discount to peers; our strong and growing Latin American business, and a lean and scalable franchise model for other markets.”
Consumers will have full access through the Payless corporate website www.paylesscorporate.com to information about the location of stores at which they can shop if their current store is being closed, as well as information about going-out-of-business sales.
The Company has also established a call center for questions: 844-648-5574 if calling from within the U.S. or Canada, or +1 347-505-5254 if calling from outside the U.S. or Canada.
Related to these activities, Payless has retained Kirkland & Ellis as its legal advisor, Guggenheim Securities as its investment banker and financial advisor and Alvarez & Marsal as its restructuring advisor.
About Payless
Payless ShoeSource is the largest specialty family footwear retailer in the Western Hemisphere, offering a wide range of fashionable shoes and accessory items at affordable prices for every member of the family. The company’s mission is simple: Become the Go To, Get More, Payless shoe store for our customers. Payless has approximately 4,400 stores in more than 30 countries and was founded in 1956 in Topeka, Kan. where its global headquarters remains today.