J. Crew Group Files for Bankruptcy Protection
J.Crew Group, Inc. Announces Comprehensive Agreement to Deleverage Balance Sheet and Position J.Crew and Madewell for Long-Term Profitable Growth
Receives Support of Key Stakeholders to Convert Approximately $1.65 Billion of the Company’s Funded Debt to Equity
Secures Commitments for $400 million in New Money Debtor-in-Possession Financing From Existing Lenders
Madewell to Remain Part of J.Crew Group, Inc.
E-commerce Businesses, Representing More Than 50% of Total Revenues, Continue to Operate in Normal Course; Retail Stores to Reopen as COVID-19 Public Health Restrictions Lift
Company Voluntarily Commences Prearranged Chapter 11 Proceedings in the U.S. Bankruptcy Court for the Eastern District of Virginia to Implement Restructuring
NEW YORK, May 4, 2020 /PRNewswire/ — J.Crew Group, Inc. (“J.Crew Group” or the “Company”) today announced it has reached an agreement with its lenders holding approximately 71% of its Term Loan and approximately 78% of its IPCo Notes, as well as with its financial sponsors, under which the Company will restructure its debt and deleverage its balance sheet, positioning J.Crew and Madewell for long-term success.
Under the terms of the Transaction Support Agreement (“TSA”), the Company’s lenders will convert approximately $1.65 billion of the Company’s debt into equity.
To facilitate the restructuring contemplated by the TSA, the parent company of J.Crew Group, Inc., Chinos Holdings, Inc. and certain affiliates, have filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Virginia.
The Company has secured commitments for a debtor-in-possession (“DIP”) financing facility of $400 million and committed exit financing provided by existing lenders Anchorage Capital Group, L.L.C., GSO Capital Partners and Davidson Kempner Capital Management LP, among others. Subject to Court approval, the DIP financing, combined with the Company’s projected cash flows, is expected to support its operations during the restructuring process.
As part of the TSA, Madewell will remain part of J.Crew Group, Inc. Libby Wadle will continue in her role as CEO of Madewell.
“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, 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.”
“J.Crew and Madewell are two classic American brands with deeply loyal customers. We look forward to supporting Jan, Libby and the management team to recognize their full potential. 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.
The Company has filed a series of customary “first day” motions with the Bankruptcy Court seeking to maintain its operations during the restructuring process to help facilitate a smooth transition into Chapter 11.
For additional information about J.Crew Group’s restructuring, including access to Court filings and other documents related to the court-supervised process, please visit www.omniagentsolutions.com/chinos, call (866) 991-8218 (U.S. & Canada) and (818) 924-2298 (International), or email firstname.lastname@example.org.
Weil, Gotshal & Manges LLP is serving as legal counsel, Lazard is serving as investment banker and AlixPartners, LLP is serving as restructuring advisor to J.Crew Group, Inc. Anchorage Capital Group and other members of an ad hoc committee are represented by Milbank LLP as legal counsel and PJT Partners LP as investment banker.
About J.Crew Group, Inc.
J.Crew Group, Inc. is an internationally recognized omni-channel retailer of women’s, men’s and children’s apparel, shoes and accessories. As of May 4, 2020, the Company operates 181 J.Crew retail stores, 140 Madewell stores, jcrew.com, jcrewfactory.com, madewell.com and 170 factory stores. Certain product, press release and SEC filing information concerning the Company are available at the Company’s website www.jcrew.com.
About Anchorage Capital Group, L.L.C.
Anchorage Capital Group, L.L.C. is a New York-based registered investment adviser founded in 2003. The firm manages private investment funds across the credit, special situations and illiquid investment markets of North America and Europe using an active long and short basis, with particular focus on defaulted and leveraged issuers.