A hedge fund that promised to turn around the popular discount shoe retailer Payless ShoeSource after its emergence from Chapter 11 in 2017 instead let it whither on the vine, eventually landing the company back in bankruptcy court in February, according to the company's creditors.

An article in USA Today cites arguments before a bankruptcy court in the Eastern District of Missouri, in which Payless creditors alleged that Alden Global Capital, which invests in distressed companies, presented a promising turnaround plan for the retailer modeled after stores like T.J. Maxx that sell brand names for discount prices. Instead they blame the hedge fund with failing to install a permanent CEO and providing the company a $45 million loan that had little impact on operations but instead boosted the secured lender's position in its current bankruptcy case.

Last week a judge ordered protections put in place, including the appointment of a monitor, according to the newspaper; but creditors as well as other lenders say they're investigating alleged conflicts of interest between Payless and Alden.

For its part the hedge fund has strongly defended itself, saying that "the challenges facing retailers today are well documented," and that Payless is simply another casualty of the retail apocalypse.

“We hear it again today that somehow we were the architects of the demise of the company, which we think is completely inappropriate and unsupported,” Allan Brilliant, an attorney representing Alden, said during a March 14 bankruptcy hearing. Payless lenders were trying to “manufacture issues here to try to get leverage in this case and derail the process,” he added.

Read the full story here,