Payless ShoeSource plan of reorganization effective as of Jan. 14

By Caroline Salls

Pittsburgh, Jan. 15 – Payless Holdings LLC’s second amended plan of reorganization took effect on Tuesday, according to a notice filed with the U.S. Bankruptcy Court for the Eastern District of Missouri.

The plan was confirmed on Oct. 23.

Payless Holdings, which does business as Payless ShoeSource, said in the disclosure statement that the plan will significantly de-lever its capital structure and preserve its profitable business segments.

“The reorganized debtors will be well positioned to compete in the retail industry with the segments of the company best primed to do so,” the disclosure statement said.

Payless said it would emerge from Chapter 11 with 89% less funded debt.

The company’s exit capital structure consists of a new first-lien facility and new common units in the reorganized company.

Holders of tranche A-1 term loan claims will receive a cash payment.

Holders of tranche A-2 term loan secured claims will receive a share of 100% of the new common units.

Holders of general unsecured claims will receive a share of liquidating trust assets.

All equity interests in the holding company will be extinguished with no consideration paid.

Payless is a Topeka, Kan.-based specialty family footwear retailer. The company filed bankruptcy on Feb. 18, 2019 under Chapter 11 case number 19-40883.

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