Dive Brief:

• The Walking Company emerged from bankruptcy last week some four months after filing for Chapter 11 for the second time in a decade, according to a press release. With 185 stores currently, the retailer leaves bankruptcy with 23 fewer locations than when it filed.
• In a release on Friday, the company said it has received more than $10 million in new equity, which was called for in a pre-negotiated plan with stakeholders, and "an enhanced financing package" from Wells Fargo. The cash infusion "will provide The Walking Company with sufficient capital to achieve its long-term growth objectives," the retailer said.
• CEO Andrew Feshbach said in a statement that the reorganization in Chapter 11 "has positioned our company for long-term success," and the retailer could now focus on growth initiatives for its The Walking Company and ABEO brands.

Dive Insight:

There are two general rules for retailers that want to exit bankruptcy in one piece: go in with a plan, and get out fast.

The Walking Company followed the path of Payless, Gymboree, rue21, True Religion and others in going into court with a pre-negotiated plan for downsizing the company, getting new financing and reemerging.

Toys R Us and Bon-Ton are textbook cases of what can go wrong if a retailer can't wrangle a deal with its creditors ahead of a filing. Those cases played out differently but ended in the same unfortunate outcome: total liquidation of the business. Now Toys R Us looms over other retailers trying to get out of bankruptcy, including Claire's Stores.

The Walking Company went into bankruptcy with commitments from some shareholders for $10 million in new equity and a $50 million loan from Wells Fargo. The shoe seller said at the outset it had a reorganization plan it expected to get approval for within 90 days.

Founded in 1991 as a retailer of European "comfort shoes," The Walking Company eventually expanded into malls and broadened its focus to include more shoe types as well as clothing and lifestyle products. The pace of physical and digital expansion quickened starting in 2005, to include more than 200 stores. That expansion was financed by liquidating the company's Big Dog banner, which collapsed more quickly than expected, and through $18.5 million in new bonds, Feshbach said in court papers in March.

The expansion ran smack into a recession. By late 2008, 100 of the newer stores were not making their projected sales and profits. The company also faced pricing pressure from big-box and mass-market retailers. It forced The Walking Company into its first bankruptcy, where it won rent concessions from landlords and reorganized with an infusion of cash from Wells Fargo and an investor group led by Kayne Anderson Capital Advisors. Feshbach said previously that, following its 2009 emergence from bankruptcy, the retailer's "core business significantly improved."

But then it ran into another sector downturn, and used bankruptcy in part to exit unprofitable leases and negotiate rent reductions across its store base. (The company also was hurt financially by the loss of a major private label vendor and by Wells Fargo devaluing the inventory backing a major loan).

The Walking Company, in a release at the time of filing, also said it was transforming itself into a "vertically integrated, omnichannel retailer that can not only survive but thrive in the current retail environment." The retailer executed its bankruptcy plan without any major hiccups. Now it has to execute in the market.