Payless Reorg Plan Confirmed With Creditors Seizing All Equity

Bankrupt retailer Payless ShoeSource won court approval of its Chapter 11 reorganization plan to continue business online and overseas, overcoming a Justice Department objection over liability releases.

A group of term-loan lenders will receive all equity in the post-bankruptcy company for its $200 million of debt, according to the plan approved Oct. 23 by Judge Kathy A. Surratt-States of the U.S. Bankruptcy Court for the Eastern District of Missouri.

Another group of term lenders agreed to be paid around 15% less than the $80 million it’s owed.

Payless, which closed all 2,500 stores in North America, will operate two main ...