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 

Gino Spocchia
Monday 04 May 2020 14:52
Comments
Trump predicts 'big bounce' for US economy following end of coronavirus lockdown

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.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in