TOPEKA, Kan. (WIBW) -- One of the largest companies in Topeka has filed for bankruptcy.
On Tuesday, Payless ShoeSource announced it would file for Chapter 11 bankruptcy protection as works to improve its balance sheets, generate growth, and close around hundreds of stores across the country. The prospect of bankruptcy had loomed over the company for a couple of weeks after Bloomberg reported a filing was imminent.
In a release, the footwear retailer said it planned to close around 400 underperforming stores in the United States and Puerto Rico. It noted that the full list of store closures will be announced soon.
"This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify," W. Paul Jones, Payless Chief Executive Officer, said. "We will build a stronger Payless for our customers, vendors and suppliers, associates, business partners and other stakeholders through this process."
The company said it would continue to operate its business in the ordinary course in terms of its customers, vendors, partners and employees.
The Company has negotiated agreements with its 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.
The company said 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.
Payless says 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.
Under the Chapter 11 plan, the company says it will strengthen its balance sheet and restructure Payless' debt load. Invest specific areas that Payless believes will provide sustainable growth including product and inventory initiatives and international expansion in Latin America.
At their Topeka headquarters, the company laid off 110 employees in January, and recently eliminated more than 20 IT positions.