Payless plans to immediately close 400 stores in the U.S. and Puerto Rico and will also "aggressively manage" the rest of its real estate portfolio. That will mean closing additional stores and seeking to modify existing lease terms. The retailer currently has 4,400 stores in more than 30 countries.

Payless was founded in the 1950s as a no-frills destination for fashionable shoes at affordable prices. However, in recent years it has suffered from flat and declining sales and a staggering amount of debt, as shoppers shun malls and instead opt for online or other discount stores. In 2012, Payless was purchased by several private equity companies as part of a $2 billion buyout of its parent company.

The retailer said it has entered into an agreement to reduce its existing debt load by almost 50%. It has also negotiated up to $385 million of debtor-in-possession financing from existing lenders to help it keep the business running and successfully emerge from bankruptcy.


Revenues slid 4% to $2.3 billion in the twelve months ending in October 2016, according to Moody's.

Payless said it is also pursuing bankruptcy so that it can invest in areas that it believes will deliver growth, like expanding in places like Latin America, bolstering its online presence and shaking up its product offerings.

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