Payless Cashways closing three of four Vegas stores

Grace Leong

Thursday, July 26, 2001 | 10:52 a.m.

Payless Cashways Inc. of Kansas City, Mo., said it will close three of its four Las Vegas-area stores by mid-October following approval of its reorganization plan on Tuesday by a U.S. Bankruptcy Court judge in Kansas City.

A Payless Cashways store at 4330 S. Decatur Blvd. will remain open. Three stores closing are at 3775 E. Sahara Ave., 3550 E. Sunset Road and 4500 N. Tenaya Way.

The building materials and finishing products company, which filed for Chapter 11 bankruptcy protection on June 4, said liquidation sales will begin this weekend at the three Las Vegas-area stores set for closure and should last for about 10 weeks.

The company said it was forced to seek bankruptcy protection after an unusually harsh winter and poor economic conditions caused sales to drop drastically in May, prompting lenders to tighten terms. That in turn hindered the company's ability to replenish stock.

Marla Holbert, Payless Cashways' spokeswoman, said each store has about 26 employees and some of the workers at the three local stores set for closure will be transferred to the remaining store on Decatur.

"In deciding which stores remains open, we considered the merit of each store. If the cash flow of a particular store didn't cover the costs to maintain that facility, as a highly leveraged company, we couldn't afford to keep those stores," Holbert said.

"In those particular markets, if we had other stores that were operating in the black, we made the decision to consolidate those locations and that included Las Vegas. That decision was approved by court on Tuesday," she said.

Payless is shutting 39 stores nationwide, putting about 1,500 employees out of work. The company will be left with 77 locations after the closings.

Many employees reacted with anger and frustration Wednesday when they learned that their severance benefits had been severely cut from what they had been told several weeks ago. Those benefits were cut Tuesday during negotiations among various parties to the bankruptcy case.

While the company originally had asked that employees receive one week of pay for each year of service and pay for all accrued vacation, sick and personal days, those benefits were whittled considerably.

Such payments were capped during Tuesday's court hearing at $4,650. Any amount over that cap owed to an employee becomes an unsecured claim in the bankruptcy proceeding. Also, any unused vacation, personal and sick days count toward that amount.

The Kansas City Star

contributed to this story