Payless ShoeSource is shuttering its remaining stores in North America, including three stores in Chattanooga and one in Dalton, Georgia, after filing for bankruptcy this week for the second time in two years.
The discount shoe retailer, based in Topeka, Kansas, filed a Chapter 11 bankruptcy petition late Monday and said Tuesday it will shut down 2,500 stores as it liquidates it business. The affected stores will remain open with going-out-of-business sales until at least the end of March and the majority are expected to remain open until May.
The liquidation doesn't affect its franchise operations or its Latin American stores, which remain open for business as usual, the company said.
The debt-burdened chain filed for Chapter 11 bankruptcy protection the first time in April 2017, closing hundreds of stores.
In its latest bankruptcy filing this week, Payless ShoeSource said that it has approximately $470 million in outstanding debt it can't service. The company has already shut down online sales. Payless will only honor gift cards until March 11.
Payless was founded in 1956 and grew to become one of the largest shoe retailers in the U.S with more than 700 stores when it filed for bankruptcy protection the first time in 2017.
In a statement, Payless chief restructuring officer Stephen Marotta said that the bankruptcy reorganization attempted in 2017 still "left the company with too much remaining debt, too large a store footprint, and a yet-to-be realized systems and corporate overhead structure consolidation."
Although Payless ShoeSource will all but cease operations, the name will live on. There are nearly 800 franchised and Latin American stores that will remain open after the company locations close.
Payless ShoeSource operates 23 stores in Tennessee and 59 stores in Georgia, including local outlets at Northgate Mall, in East Brainerd on Gunbarrel Road, and the Brainerd Market Center and in Dalton at the Walnut Square Mall.
The shut down of most Payless stores follows a record number of bankruptcies and store closings in 2108. Last year, 16 retail chains, including Sears, Toys R Us, Nine West, Mattress Firm and David's Bridal either filed for bankruptcy or shut down.