Executives at J.Crew have filed for bankruptcy protection amid a major restructure.
On Monday morning, bosses at the American retailer announced that they had filed a series of customary “first day” motions with the Bankruptcy Court so they can maintain operations while undergoing the process and to help facilitate a “smooth transition” into Chapter 11.
According to the U.S. Bankruptcy Code, a Chapter 11 filing permits reorganisation under the bankruptcy laws. Typically, the J.Crew boutiques and the brand’s Madewell stores would be able to remain open, but the coronavirus crisis has curtailed any such plans.
“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.”
As part of the Transaction Support Agreement (TSA), the company’s lenders will convert approximately $1.65 billion of its debt into equity.
In addition, Madewell will remain part of J.Crew Group, with Libby Wadle to continue in her role as chief executive officer.
“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 recognise 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,” insisted Kevin Ulrich, chief executive officer of Anchorage Capital Group.
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