J.Crew, one of the largest retailers in the U.S., has become the first major retailer to file for bankruptcy since the beginning of the coronavirus pandemic. The preppy fashion store filed for Chapter 11 protection on Monday morning, according to various reports.
According to the bankruptcy filing, J.Crew owes up to 10 billion to more than 25,000 creditors.
Since the beginning of the COVID-19 outbreak, businesses have had to shutter the doors to its brick and mortars to halt the spread of the virus.
J.Crew said it’s reached a restructuring deal to covert its $1.65 billion in debt into equity. The company has also secured $400 million of financing with its previous lenders.
Prior to the viral outbreak, the retailer had been planning an IPO for its Madewell label. But, volatility during March trading scuttled its public offering plans. Bloomberg first reported that the IPO would be canceled after J.Crew admitted it couldn’t agree with its creditors about the terms.
Madewell will continue to be part of J.Crew’s holdings according to terms of the bankruptcy. Libby Wadle will continue as Madewell’s chief executive officer.
Once the lockdowns are lifted, the retailer plans to reopen almost 500 stores and get back to business at its brick and mortar shops.
Jan Singer, J.Crew’s CEO, said: “Throughout this process, we will continue to provide our customers with the exceptional merchandise and service they can 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.”
J.Crew started in 1947 as a women’s apparel catalog called Popular Merchandise. The company renamed itself in 1983 and in 1989, J.Crew opened its first brick and mortar in Manhattan. The retailer is famous for its chinos, preppy sweaters, and work shirts, among other fashion statements. The company went private in 2011 during a $3 billion buyout.
J.Crew has posted a loss in earnings for the past five years.