J. Crew Group Inc., as expected, on Monday filed for Chapter 11 bankruptcy protection in federal bankruptcy court in the Eastern District of Virginia. The retailer said it had reached a deal with its lenders to convert about $1.65 billion of debt into equity.
The lenders include Anchorage Capital Group, L.L.C., GSO Capital Partners and Davidson Kempner Capital Management LP, among others.
“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, in a statement.
As part of the agreement, the company’s Madewell unit will remain part of J. Crew and will not be spun off, as previously planned. The retailer expects to stay in business and emerge from bankruptcy as a profitable company.
The bankruptcy filing estimated both assets and liabilities at between $1 billion and $10 billion. J. Crew said it has secured $400 million in debtor-in-possession financing from its lenders to help it restructure.
J. Crew was taken private by private-equity firms TPG Capital and Leonard Green & Partners in 2010 for about $3 billion. The retailer, which is known for its preppy fashions, has struggled in recent years as its looks have gone in and out of style and its debt burden has weighed.
Photo courtesy J. Crew
