J. Crew files for bankruptcy

It’s official: J. Crew has filed for bankruptcy.

The major retailer announced that Chinos Holdings, its parent company, has filed for Chapter 11 protection, according to the New York Times. After weeks negotiating with lenders, J. Crew has agreed to give control of the company to major creditors including the hedge fund Anchorage Capital by converting $1.65 billion of its debt into equity.

It will hold onto its Madewell brand and keep operating its e-commerce operation normally. The retailer — which has 182 stores, 140 Madewells and 170 outlets — plans to reopen after lockdown restrictions are relaxed.

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Retail had already been struggling before the pandemic, which has been devastating for the industry. Clothing and accessory sales dropped by more than half in March, and April’s numbers are expected to be even lower.

J. Crew is unlikely to be the only major retail company to file for bankruptcy. Neiman Marcus is expected to make the same move shortly, and Brooks Brothers is reportedly looking to sell itself as well in a deal that may be part of the bankruptcy process. J.C. Penney is also in talks with lenders for at least $800 million in bankruptcy financing. [NYT] — Eddie Small