J. Crew Declares Bankruptcy Amid Coronavirus Pandemic

On Monday Wall Street learned that clothing retailer J. Crew has declared bankruptcy, making it the first casualty of the coronavirus pandemic.

J.Crew Group, which operates the J.Crew and Madewell brands, became the first national US retailer to file for bankruptcy protection since the coronavirus pandemic forced stores to shutter.

The company said it has filed to begin Chapter 11 proceedings in federal bankruptcy court in the Eastern District of Virginia. J. Crew Group also said it had reached a deal with its lenders to convert about $1.65 billion of debt into equity.

“This process gives the company a chance to survive. However, that survival is not just dependent on reduced debt; it requires a reinvention of the J.Crew brand,” said Neil Saunders, analyst at GlobalData Retail.

Stores have been closed for several weeks and furloughing hundreds of thousands of employees while sales have been lost.

“Store-based retail was already struggling with internet consumption trends before coronavirus, and now will be faced with accelerated demand shifts to the internet,” said Randal Konik, an analyst at Jefferies.

“The retailers who were wandering around aimlessly pre-pandemic are going to be substantially less likely to muddle through than they were before,” commented Mark Cohen, director of retail studies at the Columbia Business School.

Some took to Twitter over the announcement about J. Crew . User @JohnCassidy said, “Don’t forget J Crew got loaded with debt years ago in a private equity deal, so this isn’t just a Covid story.”

@HausUrban said, “So J.Crew is really going to sit here and act like their Chapter 11 filing is due to Covid-19, and not the fact that they’ve been flailing year over year for at least four years?”

Last month, retailer Sears who recently emerged from bankruptcy, also announced it would close all of its remaining Sears-branded stores through at least April 30 because of the coronavirus outbreak.