J.Crew Group Inc., which operates the J.Crew and Madewell brands, has filed for bankruptcy protection. The retailer announced today that it has filed to begin Chapter 11 proceedings in federal bankruptcy court in the Eastern District of Virginia. It added that it had reached a deal with its lenders to convert about $1.65 billion of debt into equity.
J.Crew expects to utilize Chapter 11 to restructure its debt and work to reposition the J.Crew and Madewell brands for the long-term. As it works through court proceedings,, according to a statement by J.Crew Group CEO Jan Singer, the company “will continue all day-to-day operations.”
“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,” the statement added.
The company has secured commitments for a debtor-in-possession financing facility of $400 million and committed exit financing provided by its existing lenders which include Anchorage Capital Group, L.L.C., GSO Capital Partners and Davidson Kempner Capital Management LP.
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Madewell will remain part of J.Crew Group, Inc.
As reported, the the New York-based specialty retailer has held discussions with a group of lenders for several weeks since it shelved its proposed IPO for Madewell in early March.
By taking Madewell public, J.Crew had expected to raise $100 million. It revealed plans to use the money “to repay indebtedness and to support our general corporate purposes.” At the time, it had been considering the brand’s spinoff for five months, seeking to reduce its debt load of nearly $1.7 billion.
