WASHINGTON (dpa-AFX) - Specialty family footwear retailer Payless Shoesource Tuesday announced that it has filed for Chapter 11 bankruptcy in order to facilitate the financial and operational restructuring necessary to strengthen its balance sheet and position the company for long-term success.
The intends to restructure its North American entities, as well as its Hong Kong-based logistics and supply chain entities.
Payless has entered into a Plan Support Agreement 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.
As part of the restructuring, the company will close nearly 400 stores in the U.S. and Puerto Rico.
The company has entered agreements with certain existing lenders to gain access to up to $385 million of debtor-in-possession financing.
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