Being a retailer in the U.S. has always been difficult, but here in 2017, it’s really turning into a bloodbath out there. One case we’ve seen is Payless ShoeSource Inc. who filed for bankruptcy in April with $838 million of debt, recently settled a dispute with its creditors after said creditors alleged that the company’s private equity owners inappropriately siphoned off $400 million before the U.S. retailer’s bankruptcy. Oh, it’s the old “suck out $400 mil and then declare bankruptcy trick.”
And you know it involves some fun new phrases like “dividend recapitalizations” which loosely translated from legalese means — “the money you done took out before there was no more money for anyone else.” (it’s a loose translation, but you get the gist).
Under the settlement terms, the shoe chain’s unsecured creditors, largely its landlords and vendors, will receive $25 million in cash in the bankruptcy reorganization. The agreement sets Payless on track to EXIT bankruptcy as soon as August avoiding winding down its business like many of its bankrupt retail peers. As part of its reorganization plan, Payless has said it must renegotiate 3,600 U.S. store leases.
As a species, we don’t always see things the exact same way. One person’s dividend recapitalization is another’s “hey, you stole all the money and then said you were bankrupt!” Disputes happen. And when they affect YOUR business, you need a seasoned litigator like Dean Sperling to put his size 13 non-Payless-brand shoe exactly where it needs to go to resolve YOUR matter with YOUR best interests in mind.
More on the case:
Exclusive: Payless settles creditor dispute over dividends – sources