Bankrupt shoe retailer Payless has settled a dispute with creditors related to the payment of some $400 million in dividends to private equity backers Golden Gate Capital and Blum Capital, according to Reuters. Payless creditors will reportedly receive $25 million in cash as part of the company’s Chapter 11 reorganization, recovering between 17 and 21 cents on the dollar for their claims, a “major improvement” from what was expected when the case began, per Reuters.
Payless creditors had alleged that Golden Gate and Blum acted irresponsibly in borrowing money to pay themselves dividends, a tactic that’s also come into question in other recent retail bankruptcies. Payless filed for Chapter 11 in April with $838 million in debt. The company is reportedly now on track to exit bankruptcy as soon as August.