Employees of Payless ShoeSource who lost their jobs before the company’s bankruptcy filing have received some really difficult news: They won’t be receiving their severance payments for at least another month, as the company waits for its next hearing in federal bankruptcy court.
Back in January, the chain began preparations to slim down its operations, which included layoffs at the corporate office and outsourcing of information technology work. However, the Topeka Capital-Journal reports that severance payments for 265 former employees, most of whom worked at the company’s headquarters in Topeka, have to meet the approval of the bankruptcy court and the ubiquitous retailer’s many, many creditors.
“To give creditors and parties in interest appropriate notice of the relief requested in the wages motion, the Court will review and address requests for severance and other similar matters at a hearing that is scheduled for May 9, 2017,” a company spokeswoman explained to the Capital-Journal.
In bankruptcy proceedings, even routine expenses must be approved by the court. While the court has already approved some important expenses and “key vendors,” those expenses didn’t include severance payments to employees. The proposed sale of hhgregg, for example, fell apart over the condition that the company consider its advertising agency a key vendor and pay off its bill in full instead of paying, say, suppliers to provide the chain with appliances.
Payless is currently closing almost 400 stores across the country, but will have the severance situation sorted out for eligible employees by the time those stores close their doors for the last time.