Bankrupt shoe retailer Payless has settled a dispute with creditors related to the payment of some $400 million in dividends to private equity backers Golden Gate Capital and Blum Capital, according to Reuters. Payless creditors will reportedly receive $25 million in cash as part of the company’s Chapter 11 reorganization, recovering between 17 and 21 cents on the dollar for their claims, a “major improvement” from what was expected when the case began, per Reuters.
Retail Apocalypse Snowballs As Liquidity Collapses
Payless creditors had alleged that Golden Gate and Blum acted irresponsibly in borrowing money to pay themselves dividends, a tactic that’s also come into question in other recent retail bankruptcies. Payless filed for Chapter 11 in April with $838 million in debt. The company is reportedly now on track to exit bankruptcy as soon as August.
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