by Stephen Garner
Getty Images

Embattled retailer J.Crew has officially filed for Chapter 11 bankruptcy protection in the state of Virginia, the first major retail chain to do so since the pandemic forced most stores in the United States to close.

J.Crew will emerge from the restructuring with new owners — it reached a deal to turn $1.65 billion of its debt into equity for its lenders, including the investment firms Anchorage Capital Group, GSO Capital Partners, and Davidson Kempner Capital Management LP – effectively handing them control of the company.

The retailer’s lenders will also provide $400 million in financing to see it through the bankruptcy process, during which it plans to keep operating.

“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,” said Jan Singer, chief executive officer of J.Crew Group. “Throughout this process, we will continue to provide our customers with the exceptional merchandise and service they 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.”

The retailer expects to stay in business and emerge from bankruptcy as a profitable company. Madewell, the fast-growing denim brand that had been slated for an IPO, will remain part of the business and will no longer pursue going public.

As of today, the company operates 181 J.Crew stores, 140 Madewell stores, 170 Factory stores, jcrew.com, jcrewfactory.com, and madewell.com.