J.Crew, With Store At Old Orchard, Files For Bankruptcy

The parent company of preppy clothing retailer J.Crew, which has a store in Skokie, announced Monday it has filed for bankruptcy protection. Burdened with high levels of debt since a private equity firm acquired it in a leveraged buyout, the company becomes the first major retail chain to do so since the response to the coronavirus pandemic forced businesses to close their doors.

J.Crew Group, which also operates the Madewell brand of clothing, estimated it had assets and liabilities of between $1 billion and $10 billion, according to a Chapter 11 bankruptcy filing in the U.S. Bankruptcy Court for the Eastern District of Virginia.

In Skokie, J.Crew has a store at the Westfield Old Orchard shopping center. As a non-essential retailer, it has been forced to shutter during the statewide stay-at-home order Gov. J.B. Pritzker's issued March 20.

J.Crew’s lenders have agreed to convert $1.65 billion of its debt into equity, and the company has secured commitments for financing $400 million from its existing lenders, Anchorage Capital Group LLC, GSO Capital Partners and Davidson Kempner Capital Management LP, among others.

The company’s Madewell denim brand, which had been slated to begin public trading before the pandemic hit, is expected to remain part of the business. The company had hoped to use the proceeds of the initial public offering to pay down its debt.

J.Crew was in trouble before the seismic shifts in the retail industry brought on by the coronavirus business closings.

TPG Capital and Leonard Green & Partners acquired the company for $3 billion in 2011. Retail veteran Mickey Drexler led it for more than a decade, and it became a valued brand, spurred partially by former first lady Michelle Obama, who famously sported J.Crew slim skirts and cardigans in her eight years in the White House.

Drexler severed his ties with the retailer in January 2019.

J.Crew will continue to operate online during the bankruptcy proceedings, according to a statement on the J.Crew Group website.

The company said it hopes to reopen the bricks-and-mortar stores once coronavirus restrictions are lifted and it is safe to do so.

Last year, J.Crew sales were $2.5 billion, a 2 percent increase from 2018.

The company began in 1983 as a catalog retailer, then opened its first store in New York City in 1989. As of Feb. 1, there were 193 J.Crew stores, 172 J.Crew factory outlets and 132 Madewell locations.