Payless ShoeSource has filed for bankruptcy protection as the shoe retailer prepares to wind down its 2,500 U.S. stores.

The filing was made Monday night, a day after it began liquidation sales for its U.S. stores. The filing said Payless has about $470 million in outstanding debt.

CNBC previously reported the chain was preparing for a potentially imminent bankruptcy. In hopes of keeping some stores open, it had been seeking a buyer for swaths of its domestic real estate, but no deals were struck.

The retailer, founded in in 1956 in Topeka, Kansas, expects all stores to remain open until at least the end of March and the majority until May. It is also winding down its e-commerce operations.The liquidation will not impact its franchised or Latin American stores.

Payless first filed for bankruptcy protection in April 2017, eliminating nearly 700 stores and roughly $435 million in debt. Its emergence after four months was notable — many retailers, such as Toys R Us, have been unable to avoid complete financial collapse. Ultimately, though, Payless joined the scant number of survivors that, like Gymboree, boomeranged back into bankruptcy court.

The retail industry continues to be in a state of upheaval as shoppers head online and demand more out of their shopping experience. The changes benefit giants with scale like Walmart or smaller, local shops — but has left those in the middle squeezed. Larger retailers have the resources to invest in supply chain and online capabilities, while local retailers can cater to regional tastes.

Payless, in particular, has faced competition from larger competitors like T.J. Max parent TJX Companies, which has a market capitalization of $62 billion, and shoe retailer DSW, which has a market capitalization of $2.2 billion.

"The challenges facing retailers today are well documented, and unfortunately Payless emerged from its prior reorganization ill-equipped to survive in today's retail environment," chief restructuring officer Stephen Marotta said in a statement.

"The prior proceedings left the company with too much remaining debt, too large a store footprint, and a yet-to-be realized systems and corporate overhead structure consolidation."

Much of its initial debt stemmed from the roughly $2 billion sale of its former parent, Collective Brands, to Wolverine World Wide and private equity firms Blum and Golden Gate. Blum and Golden Gate held on to Payless, while Wolverine took control over Collective's other brands, like Sperry Top-Sider, Stride Rite and Keds.

It blamed its initial bankruptcy filing on "antiquated" inventory management and port strikes in the West Coast that delayed its shipments before the crucial Easter holidays, and ultimately let to a glut of off-season shoes. The retailer promised that, upon its re-emergence, it would lean on its strong brand name in the U.S. and growth in Latin America. It was then the region's largest specialty footwear retailer, according to court documents.

But Payless faced "unanticipated" delays from its suppliers in the past two years that, once again, forced it to sell inventory at deep-discount prices, the retailer said in court documents.

Payless had a loss of $63 million in 2018 and a loss of $4 million in 2017.

With cash tight, it was unable to invest in and deliver the fully "omnichannel" experience it had promised would combine online and brick-and-mortar shopping. It rolled out its unified shopping capabilities to only 200 stores, 8 percent of its U.S. footprint.

Correction: This story was revised to correct the timing of the latest bankruptcy court filing.

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