J. Crew Group filed for chapter safety Monday with a plan at hand over control to lenders, including to an inventory of brick-and-mortar retailers pushed to the brink by widespread retail storeclosures in response to the COVID-19 pandemic.
The New York-based chain, known for preppy clothes at times worn by former first lady Michelle Obama, filed for chapter in a Virginia federal court with a settlement to remove its roughly $1.65 billion of debt in exchange for ceding ownership to collectors. It is the first big retailer to collapse during the pandemic.
Anchorage Capital Group, Blackstone Group’s GSO Capital Partners, and Davidson Kempner Capital Management hold significant roles in J. Crew’s senior debt and are in line to take control of the company.
They’re also offering nearly $400 million of fresh financing to aid J. Crew’s operations, while it navigates Chapter 11 bankruptcy proceedings, the company mentioned in a statement.
In addition to canceling debt, J. Crew plans to close shops, though the ultimate number it plans to shutter has not but been determined, an individual familiar with the matter stated.
The coronavirus pandemic compelled the company to temporarily shut its nearly 500 J. Crew, J. Crew Factory and Madewell shops. As well as, the economic downturn and market turmoil stemming from the public health disaster resulted in J. Crew shelving plans for an initial public offering of its Madewell business.
Madewell will stay part of J.Crew Group, and Libby Wadle will continue in her position as Chief Executive Officer of Madewell, the company added.