People in Rockville may often be shocked to hear the news that a certain person or company has filed for bankruptcy, believing that certain individuals and businesses either are so successful or have such a strong market presence that facing financial struggles might seem an impossibility. Yet such news should serve as a stark reminder that no person or organization is immune from experiencing monetary difficulties. Such difficulties may be due to struggles to adapt to new challenges, or unforeseen circumstances that place people or companies in a disadvantageous position.
In the case of the popular shoe retailer Payless, it appears to have been both. Many well-established retailers have lost huge portions of their customer bases in recent years as online retail continues to grow. While other companies in their space have been able to survive by creating strong online identities themselves, Payless has failed to keep up. That fact, coupled with supply chain issues and massive internal computer network failures in 2017 and 2018 that forced the company to lose millions by selling excess inventory at below-market prices, has left the once-thriving retailer in a near-fatal financial position. That position was detailed in a recent Chapter 11 filing, in which store representatives announced the companies intention to close all of its stores in the U.S. and Canada. The company’s international stores will remain open.
While Chapter 11 may offer some companies the chance to emerge from bankruptcy relatively unscathed, in other cases it may be the only way for a business to avoid massive financial losses to both itself and its creditors. No matter which outcome a company hopes for, its management may be wise to first seek the advice of bankruptcy attorneys before taking such a massive step.