J.Crew becomes the first retailer in the US to file for bankruptcy during COVID-19 crisis
Robyn Turk| Monday, May 04 2020
After news broke last week that the J.Crew Group would be filing for bankruptcy protection, the American retailer has announced that it began its Chapter 11 proceedings in federal bankruptcy court in Virginia. The company, which includes the brands J.Crew and Madewell, is the first retailer in the U.S. to file for bankruptcy protection since the COVID-19 pandemic forced retailers across the country to close brick-and-mortar stores for at least six weeks.
J.Crew said that it has reached an agreement with its lenders to restructure its debt and deleverage its balance sheet. Its lenders will convert about 1.65 billion dollars of the company's debt into equity, which J.Crew hopes will help it position its brands for long-term success.
"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, the J.Crew Group's CEO, said in a statement.
"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."
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The company has confirmed that Madewell will remain part of J.Crew Group, as several had wondered whether the company might decide to sell the brand off.
J.Crew said it will continue to focus on its e-commerce businesses for both brands, which now represents at least 50 percent of total revenues. Since the company closed its stores in March, it has been holding sales through its e-commerce sites, such as limited-time sitewide sales or discounts on clearance items.
E-commerce will continue to operate as normal while the company waits for public health restrictions to lift before reopening its brick-and-mortar stores.
Photo courtesy of the brand