J. Crew, America’s first major fashion chain, files for bankruptcy at COVID-19, but hopes to emerge from bankruptcy and continue operations.
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The U.S. retail sector is the first victim of COVID-19. This is the fashion chain J. Crew, which filed for bankruptcy with $ 1.65 billion in debt.
The company filed for Chapter 11 proceedings before the Federal Bankruptcy Court in the eastern district of Virginia. He also reported that he had an agreement with his lenders to convert approximately $ 1.65 billion in debt into equity.
In parallel to its bankruptcy, the company signed a $ 400 million loan with its creditors. With this line of credit and cash flow, she is confident that she will be able to maintain operations during her restructuring process.
The outbreak of the coronavirus forced J. Crew to temporarily close its nearly 500 stores in the United States, the J. Crew factory, and the Madewell stores.
The retailer hopes to stay in business and to come out of bankruptcy as a profitable company. Madewell, the fast-growing denim brand that was scheduled for an IPO (Initial Public Sale), will continue to be part of the business.
“We will continue our day-to-day operations,” said Jan Singer, chief executive of the J.Crew Group, in a statement.
Bankruptcy does not necessarily mean that a company goes bankrupt. Many companies use bankruptcy to get rid of debts and other liabilities that they cannot pay to close unprofitable businesses and locations.