J.Crew has become the first national retail chain to file for Chapter 11 bankruptcy during the COVID-19 pandemic. The retailer’s e-Commerce businesses will continue normal operations during the restructuring effort, and brick-and-mortar stores will reopen as public health restrictions lift.
J.Crew’s lenders will convert approximately $1.65 billion of the company’s debt into equity under an agreement reached with the retailer. J.Crew also has secured commitments for a debtor-in-possession financing facility of $400 million and committed exit financing provided by existing lenders, including Anchorage Capital Group LLC, GSO Capital Partners and Davidson Kempner Capital Management LP, to support operations during the restructuring process.
Madewell will remain part of J.Crew under the agreement, and Libby Wadle will remain as CEO of the brand. The retailer had previously considered spinning off the successful denim retailer to raise capital and ease its debt load.
“J.Crew and Madewell are two classic American brands with deeply loyal customers,” said Kevin Ulrich, CEO of Anchorage Capital Group in a statement. “We look forward to supporting [J.Crew CEO Jan Singer], 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.”