As Payless wades through bankruptcy again, creditors say hedge fund may be to blame
When Payless ShoeSource emerged from bankruptcy protection in August 2017, the national discount footwear company vowed to reinvent itself. But today the retailer and a hedge fund that controls it are locked in a contentious battle over its second turn through bankruptcy.
In February, just a year-and-a-half after its first Chapter 11 reorganization case, Payless landed back in bankruptcy court – this time wiping a decades-old retailer off the map in the U.S. and Canada. The turn of events has destined an estimated 16,000 workers for unemployment and disappointed consumers who relied on the chain's 2,500 stores and website for affordable shoes, boots, and sandals.
The company intends to keep Payless' overseas operations running.
Some of the chain's lenders and creditors claim the collapse may stem in part from self-inflicted causes. They cite the role of Alden Global Capital, a prominent hedge fund that is Payless’ majority shareholder as well as a major lender.
Critics maintain Alden has invested in distressed companies and then in some cases installed unseasoned executives who cut costs and sold assets while failing to take steps needed for successful corporate turnarounds. Some Payless creditors and lenders also have raised questions about what they characterized as conflicts of interest between Alden and Payless.
Click here to read the full story, including Marc Carmel's comments on a recent judge's order.