J Crew files for bankruptcy protection after coronavirus pandemic forces store closures
J Crew becomes America’s first retailer to fall victim to Covid-19, although will retain some stores opening reopening
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Your support makes all the difference.J. Crew Group, which owns the J.Crew and Madewell brands, has become the first US retailer to file for bankruptcy protection since the coronavirus pandemic began shuttering businesses.
The owner of J.Crew said on Monday that it will commence Chapter 11 proceedings in a federal bankruptcy court in the Eastern District of Virginia.
The company added that it had reached an agreement with its main creditors which allows them to take control of the group in exchange for cancelling debts of $1.65bn (£1.3bn).
They are also providing $400m (£322m) of financing to keep J Crew’s operations afloat during the restructuring process.
It means that some of the group’s 500 stores closed during the pandemic will not reopen, although the number of outlets that will shut has not been announced.
Control of the J. Crew Group will now pass into the hands of Anchorage Capital Group, GSO Capital Partners and Davidson Kempner Capital Management, who hold much of the company’s debt.
J. Crew chief executive Jan Singer said in a statement that this was a “critical milestone in the ongoing process to transform our businesses”.
“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,” she added.
The company expects to emerge from the restructuring – and the pandemic – as a profitable business.
But more bankruptcies are expected across the retail sector after prolonged store closures, whilst retail sales in the US have declined to their lowest ever levels.
J. Crew had already been in some financial difficulty before the Covid-19 outbreak began, with £1.7bn (£1.3bn) worth of debt in February this year.
Operations at J.Crew will continue throughout the restructuring and its online store will still be open, the company said on Monday. It anticipates that stores will reopen when it’s safe to do so.
The retailer generated $2.5bn (£2bn) in sales last year, a 2 per cent increase on the year before.
J. Crew bosses had planned to spin off the successful Madewell denim clothing brand before the pandemic, but Madewell will now remain part of J.Crew Group Inc.
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