In a statement on Monday, J. Crew said it has filed for Chapter 11 bankruptcy protection with $400 million in debtor-in-possession financing from its lenders to help it restructure.
As part of the filing in federal bankruptcy court in the Eastern District of Virginia, the company says it has reached a deal with its lenders to convert about $1.65 billion of debt into equity, according to Market Watch. Lenders include Anchorage Capital Group, L.L.C., GSO Capital Partners, and Davidson Kempner Capital Management LP, among others.
As part of the plan, the company’s Madewell unit will remain part of J. Crew and will not be spun off, as previously planned. Madewell is the fastest-growing denim brand and was slated for an IPO, according to CNN.
“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,
“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, Chief Executive Officer of Anchorage Capital Group.
J. Crew was having a tough time, even before the coronavirus pandemic hit. Known for its “preppy” fashions, the company has struggled over the past few years as its looks have gone in and out of style. Of the company’s approximately 14, 500 employees, according to the most recent disclosure, 10,000 are part-time workers.
