Prepster paradise J.Crew officially filed for Chapter 11 bankruptcy protection under U.S. Bankruptcy Code, according to an announcement made by the J.Crew Group on Monday, May 4. But J.Crew and sister brand, Madewell, are still in business and intends on making it out of this rough patch.
J.Crew is the first company to file for bankruptcy during the COVID-19 pandemic and experts predict that there are going to be more where that came from.
The purpose of filing for Chapter 11 protection is so that parent company J.Crew Group can reorganize its debts and ultimately get a fresh financial start. To do this, lenders plan on converting approximately $1.65 billion of J.Crew’s debt into equity.
One common misconception about this process is that many assume J.Crew is going out of business. At this time, J.Crew, Madewell and its respective e-commerce sites remain in business.
“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, the Chief Executive Officer of the 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.
She concluded, “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.”
On March 16, the company formally announced that it was closing brick-and-mortar stores in response to the COVID-19 pandemic. They originally planned on closing doors for just two weeks, but it was quickly decided that they’d have to remain closed until further notice.
In a statement online, the brand said, “We’ve decided to close all J.Crew and J.Crew Factory retail stores until further notice based on guidance from government officials as well as our desire to do our part to protect and care for our associates, customers and the public health.”
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