Payless ShoeSource, the largest specialty family footwear retailer in the Western Hemisphere, has filed a voluntary petition for reorganization pursuant to Chapter 11 of the U.S. Federal Bankruptcy Code.

The company’s North American entities, as well as two foreign Hong Kong-based entities involved in logistics and supply chain, are included in the restructuring, which has been filed in the U.S. Bankruptcy Court for the Eastern District of Missouri. Payless will continue to operate its business in the ordinary course in terms of its customers, vendors, partners and employees.

Payless has entered into a plan support agreement with parties who hold or control approximately two thirds 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 with a sustainable capital structure for the future.

Payless negotiated agreements with certain of its existing lenders to provide Payless access to up to $385 million of debtor-in-possession financing, which includes access to $305 million of ABL financing and up to $80 million in new term loan financing.

According to the voluntary petition filed with the bankruptcy court, Wells Fargo is serving as collateral agent, administrative agent and swing line lender. Cortland Products is serving as DIP term loan administrative agent.

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 $80 million of new term loan financing will also ensure the company has the exit financing required to emerge from Chapter 11 positioned for future growth and profitability post-restructuring.

Payless has retained Kirkland & Ellis as its legal advisor, Guggenheim Securities as its investment banker and financial advisor and Alvarez & Marsal as its restructuring advisor.