Tight squeeze for Payless Shoes

Payless is preparing for its second trip to bankruptcy court with a plan that could drastically shrink the size of the discount shoe chain, according to people with knowledge of the matter.

The retailer is seeking a loan to get through bankruptcy proceedings and discussing plans to shutter a significant portion, and potentially all, of its North American stores, said the people, who weren’t authorized to speak publicly. A representative for Topeka, Kansas-based Payless declined to comment.

Payless would become the latest in a wave of retail bankruptcies during the past two years as online rivals and heavy debt overtake once-iconic brands like Toys “R” Us and Sears. There’s no letup in sight, with at least half a dozen names going bust so far this year, including Shopko, FullBeauty Brands, Charlotte Russe, Things Remembered and Gymboree. The latter sought court protection for a second time last month and is liquidating most of its business.

Payless was founded in 1956 with the goal of selling affordable shoes in a self-service setting and says it’s the largest specialty footwear chain in the Western Hemisphere.