NEW YORK – US apparel business J Crew has filed for bankruptcy protection in a move which will see its main creditors take control of the group in exchange for cancelling debts of US$1.65bn. They will also provide about US$400m of fresh financing to keep J Crew’s operations afloat. 500 J Crew stores have been closed by the Covid-19 pandemic and some will not reopen.
J Crew is one of a number of apparel retailers in the UK and US which have been struggling to deal with the threat of online retailers – and Amazon – in recent years. Analysts believe Covid-19 may well be the straw that broke the camel’s back for the likes of JCPenney, Sears Corp, Arcadia, New Look, Gap, Debenhams and House of Fraser, among others.
Control of J Crew will pass into the hands of Anchorage Capital Group, GSO Capital Partners and Davidson Kempner Capital Management, which hold large amounts of its debt.
“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, J.Crew Group. “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. As we look to reopen our stores as quickly and safely as possible, this comprehensive financial restructuring should enable our business and brands to thrive for years to come.”
“J.Crew and Madewell are two classic American brands with deeply loyal customers. We look forward to supporting Jan, 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,” said Kevin Ulrich, chief executive officer of Anchorage Capital Group.