Clothing apparel company J. Crew filed for bankruptcy Monday, marking the first major retail bankruptcy of the coronavirus pandemic.
The company said it has reached a deal to convert $1.65 billion of its debt to equity.
It has secured $400 million in financing from existing lenders, Anchorage Capital Group, GSO Capital Partners and Davidson Kempner Capital Management, to help fund operations through bankruptcy.
The New York-based retailer had already been struggling under a heavy debt load and sales challenges, as it suffered criticism that it fell out of touch with its once-loyal customers. In the past few years, the brand lost both its longtime design chief, Jenna Lyons, and famed retail executive Mickey Drexler, who was its CEO.
Those challenges have been exacerbated by the coronavirus pandemic that has forced stores to shutter, throwing the retail industry into a state of disarray.
The retailer operates 182 J. Crew retail stores, as well as 140 Madewell stores, the youthful brand it launched in 2006. J. Crew had hoped to spin off Madewell in an IPO that could have helped pay down its debt load, but faced pushback from creditors.
J. Crew said Monday Madewell will remain part of the company.
“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,” J. Crew CEO Jan Singer said in a statement.