J Crew, which had been struggling much before the pandemic crisis started and with the deadly onslaught of COVID-19 early this year, finally filed for Chapter 11 bankruptcy. A committee of unsecured creditors claimed in the bankruptcy court that J. Crew and its secured lenders grossly undervalued’ the business while overvaluing certain collateral. This led to shifting away of value from general unsecured creditors.
The retailer also reached an agreement with landlords of J Crew and Madewell to secure certain concessions including rent deferrals and one-time waivers that will help the retailer save $70 million this year and another $60 million next year, provided sales complement the projection.
The retailer has reopened 95 per cent of its stores and reinstated most of its workers. The retailer currently operates 178 J. Crew stores, 145 Madewell stores and 170 factory stores, and generated revenue of $2.54 billion in 2019.