The J.Crew Group, the operator of J.Crew and Madewell brands, has become the first national US retailer to file for bankruptcy protection since the coronavirus pandemic forced a wave of store closures.
J. Crew’s parent company, Chinos Holdings, announced the news today as they began Chapter 11 filings in federal bankruptcy court in the Eastern District of Virginia. The company also said it had reached a deal with its lenders to convert $1.65 billion of debt into equity and also has secured a $400 million debtor-in-possession loan.
Prior to the outbreak of the coronavirus pandemic, J.Crew was planning on spinning off Madewell, to help pay down its debt, but recent pandemic derailed the initial public offering plans of Madewell.
The move comes ahead of expected challenges for other U.S. retailers including JCPenney, Sears/Kmart and Neiman Marcus, the latter which has been said to be considering filing for bankruptcy to ease its $4.3 billion debt load.
J. Crew’s online business will continue to operate normally throughout its restructuring, and the firm has stated they plan to reopen its J. Crew and Madewell stores once lockdowns are lifted.
“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, Chief Executive Officer, J.Crew Group. “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.”