Much to the dismay of preppy collar-flippers everywhere, J.Crew has formally filed for bankruptcy protection as the coronavirus pandemic and corresponding shutdown of retail as it was known claims its first corporate victim.
J.Crew Group on Monday officially filed for bankruptcy, partially a victim to a steep drop-off in sales but also a byproduct of a crushing $1.65 billion debt load rooted in a long-ago leveraged buyout that was supposed to turn the retailer back around.
In a statement, J.Crew said it has reached a deal with a majority of its lenders to convert $1.65 billion of debt into equity, which it will then use to liquidate its holdings, including existing stock and other assets, to pay back lenders and extract itself from leases and other obligations.
Like many U.S. retailers, J.Crew shut its stores in March as the fast-spreading coronavirus prompted government officials to mandate nonessential businesses to close. Other retailers including J.C. Penney (JCP) - Get Report and Neiman Marcus are also exploring bankruptcy proceedings.
J.Crew’s roots date back to 1947 with the opening of Popular Merchandise, which sold low-priced women's clothing marketed through in-home demonstrations. It expanded as a sales-catalog operation in the 1980s.
The company operated 182 J.Crew-branded stores, 140 Madewell stores and 170 factory stores as of March 2, according to recent filings.
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