J. Crew Files For Chapter 11 Bankruptcy, Will Close An Unspecified Number Of Stores

VIRGINIA, UNITED STATES — J. Crew Group Inc., struggling with huge debt and difficulties at the J. Crew brand, has filed for Chapter 11 bankruptcy in the  U.S. Bankruptcy Court for the Eastern District of Virginia.

The filing confirmed a report in WWD posted today.

The company said Monday that it has reached an agreement with its lenders holding about 71 percent of its term loan and about 78 percent of its IPCo Notes, as well as with its financial sponsors, under which the company will restructure its debt and deleverage its balance sheet, positioning J. Crew and Madewell for “long-term success.”

Under the terms of the transaction support agreement, the company’s lenders will convert about $1.65 billion of the retailer’s debt into equity.

The company has secured commitments for a debtor-in-possession (“DIP”) financing facility of $400 million and committed exit financing provided by existing lenders Anchorage Capital Group, LLC, GSO Capital Partners and Davidson Kempner Capital Management LP, among others.

The retailer will continue to operate with the DIP financing.

Madewell will remain part of J. Crew Group Inc. Libby Wadle will continue in her role as chief executive officer of Madewell.

“This agreement with our lenders represents a critical milestone in the ongoing process to transform our business with the goal of driving long-term, sustainable growth for J. Crew and further enhancing Madewell’s growth momentum,” said Jan Singer, the group’s CEO. “Throughout this process, we will continue to provide our customers with the exceptional merchandise and service they expect from us, and we will continue all day-to-day operations, albeit under these extraordinary COVID-19-related circumstances. As we look to reopen our stores as quickly and safely as possible, this comprehensive financial restructuring should enable our business and brands to thrive for years to come.”

“J. Crew and Madewell are two classic American brands with deeply loyal customers. We look forward to supporting Jan, Libby and the management team to recognize their full potential. The significant deleveraging contemplated by this agreement, coupled with J. Crew Group’s strategy to strengthen its robust e-commerce platform to drive continued growth in its direct-to-consumer segment, will position the Company for future success,” said Kevin Ulrich, CEO of Anchorage Capital Group.

The company has filed a series of customary “first day” motions with the bankruptcy court seeking to maintain its operations during the restructuring process to help facilitate a smooth transition into Chapter 11.

Photos Credit: J. Crew / Shutterstock / Sorbis

Source: WWD