J Crew files for bankruptcy as coronavirus derails turnaround plan
J Crew has filed for bankruptcy after the coronavirus pandemic forced it to close stores and derailed the retailer’s turnaround plans.
Under the terms of the filing, the New York-based clothing brand’s main creditors will take control of the business in exchange for wiping out $1.65bn of debt.
Anchorage Capital Group, Blackstone, GSO Capital Partners and Davidson Kempner Capital Management are now in line to take control of the firm. They will also provide around $400m of fresh funding.
J Crew will also permanently close some stores as part of the bankruptcy proceedings. All of the company’s stores, including seven in London, were temporarily closed due to the coronavirus pandemic.
It was also forced to cancel plans for an initial public offering of its Madewell business. It had planned to use the proceeds of the IPO to reduce its debt.
The retailer was taken private in 2011 by TPG and Leonard Green & Partners in a $3bn leveraged buyout. The investments are now expected to be wiped out, Reuters reported.
Kevin Ulrich, chief executive of Anchorage Capital Group, told the BBC: “J Crew and Madewell are two classic American brands with deeply loyal customers.
“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.”