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Payless Chapter 11 Bankruptcy Filing

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Privately-held Payless (f/k/a Collective Brands) and 28 affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Eastern District of Missouri, lead case number 17-42257 (Payless ShoeSource). The Company, which retails footwear, is represented by Steven N. Cousins of Armstrong Teasdale. The Company announced that it initiated this filing to facilitate the financial and operational restructuring necessary to strengthen its balance sheet and position the Company for long-term success.

The Company’s North American entities, as well as two foreign Hong Kong-based entities involved in logistics (CBL) and supply chain (DAL), are included in the restructuring. Payless is also filing for recognition of the U.S. Chapter 11 proceedings under Part IV of the Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice. In conjunction with the restructuring, Payless has entered into a plan support agreement (PSA) with parties who hold or control approximately 2/3 of its first lien and second lien term debt to reduce its debt load by almost 50%, materially lower its annual cash interest costs, access significant additional capital and provide a path to an expedited emergence from Chapter 11 protection with a sustainable capital structure for the future.

W. Paul Jones, Payless’ president and C.E.O., comments, “We will build a stronger Payless for our customers, vendors and suppliers, associates, business partners and other stakeholders through this process. While we have had to make many tough choices, we appreciate the substantial support we have received from our lenders, who share our belief that we have a unique opportunity to enable Payless – the iconic American footwear retailer with one of the best-recognized global brands – to remain the go-to shoe store for customers in America and around the globe.”

The Company has negotiated agreements with certain of its existing lenders to provide Payless access of up to $385 million of debtor-in-possession financing, which includes access to $305 million of ABL financing and up to $80 million of new term loan financing. In total, the debtor-in-possession financing will provide Payless with access to up to $120 million in incremental liquidity during the Chapter 11 cases. The Company’s petition indicates assets greater than $500 million.

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