After weeks of speculation, a new report suggests that a bankruptcy filing for Payless ShoeSource could be just days away.
According to Bloomberg, people familiar with the matter have suggested that the struggling retailer could pull the trigger as soon as next week.
Earlier this month, a source familiar with the matter told Footwear News that Payless was expected to file for Chapter 11 protection in April.
If the Topeka, Kansas-based firm does add its name to a bankruptcy court docket next week, a filing and formal restructuring plan could answer questions from vendors and agents who have contacted FN with grievances against Payless during the past few months.
A Telling Timeline
In late January, several of the retailer’s vendor partners told FN that Payless had fallen months behind on its bills with their respective firms. That news came just days after Reuters reported that the firm had been meeting with debt-restructuring attorneys to address its approximately $665 million in debt. In that same month, the company announced that it laid off 165 employees, or 2 percent of its total associate base.
In early March, speaking exclusively to FN, one China-based agent said he and multiple Chinese factories, for which Payless is a top revenue source, have been cracking under the weight of Payless’ unpaid debts. The source alleged that when some of the factories asked Payless for payment, the company wasn’t forthcoming about when those payments would be made but warned that if they stop supplying the shoes, Payless will not continue to do business with them.
Reports out of China on March 3 suggested that Payless’ financial struggles could have a ripple effect on factories overseas. Zhenmao Zheng, vice chairman of the Financial Supervisory Commission for the Republic of China, told Taiwan’s United Daily News that if Payless is unable to pay its debt, dozens of “companies that have business with Payless [could] go bankrupt.”
On March 10, a source close to the situation told FN that about 200 unpaid Payless suppliers and factory workers protested against the company on March 9 at a container freight station (CFS) in Xiamen, China. (A CFS is the location where manufactured goods are packed into containers for shipping.)
According to the source, the group — which had been organizing the protests for several weeks — demanded that Payless make good on several hundred million dollars of unpaid debt. Demonstrators attempted to prevent the shipping of containers filled with shoes and other wares to the Kansas company, the source added.
FN exclusively revealed in September Payless’ plans to close between 350 and 500 of its 4,400 stores within the next three years. More recent reports have suggested that the number of store closures could be closer to 1,000.