Playing a game of chicken with some high-profile mall magnates, Santa Barbara-based shoe retailer The Walking Co. has filed for Chapter 11 bankruptcy, citing untenable leases it signed during what company leaders called a “high water mark for retail space.”

The Walking Co., formerly known as Big Dogs, said the move came about because it couldn’t renegotiate rents for many of its mall-based stores during a tough retail environment. The company hopes to shed unprofitable stores and re-emerge from bankruptcy by early next year, the company said in a release.

The Walking Co. did not immediately disclose its assets, liabilities or sources of debtor-in-possession financing. The bankruptcy filing was not immediately available in the court’s electronic records system. Chapter 11 of the Federal Bankruptcy Code allows companies to suspend obligations to creditors while reorganizing to meet their debts.

The Walking Co. expanded rapidly between 2005 and 2008. But as the retail environment turned sour, the company struggled, shuttering and then finally selling its Big Dogs clothing chain in March to focus on footwear.

The company was once traded on the Nasdaq. But with fewer than 100 shareholders and a low market capitalization, the company decided it could save money by withdrawing from the exchange in April. At Sept. 30, 2008 – the last time the company reported financial information – The Walking Co. had lost $9.7 million for the year.

The company said that while its early 2009 restructuring was largely successful, it couldn’t get the landlords at many of its stores to lower rents.

“We believe our business model is sustainable in today’s world, despite declining consumer spending and mall traffic at present,” Andrew Feshbach, chief executive of the firm, said in a release. “However, the unfortunate timing of our rapid expansion caused us to enter into lease commitments at what now appears to be the high water mark for retail space.”

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