Steve Madden has sunk a $5 million debt and equity investment into Bakers Footwear Group in return for a stake of 19.99 percent. Bakers will end up with about $4.6 million in cash from the deal, which is has said it will use for working capital. In spite of its new position within the American retail company, Madden to vote the same way as Bakers' chief executive, Peter Edison, on major decisions.

In August, Bakers recorded a 0.9 percent drop in sales to $11.1 million, but its comparable store sales rose by that same amount. For the quarter ended July 31, the chain's revenues slipped by 0.9 percent to $43.3 million, with a 0.2 percent increase in comparable store sales.

Madden has been one of the largest suppliers of Bakers stores. The investment has a resemblance with the recent acquisition of a 49 percent stake in the German Leiser Group of shoe retail stores by Josef Seibel (see previous issue).

In another more mysterious investment move, Madden has used its large cash pile to take over a $48.8 million loan held by Betsey Johnson that was in default. Madden has created a subsidiary to assume the outstanding principal of what was originally a $50 million loan when Betsey Johnson took it out in 2007 from creditors including Babson Capital Australia and Paradox Lending. Madden paid about $27.6 million to buy out the lenders. Terms of the loan now have Madden paying it off in quarterly installments through Aug. 20, 2012.

The filing with the Securities and Exchange Commission reports that Steve Madden is in discussions with Betsey Johnson about resolving the debt.