J.Crew Group emerges from bankruptcy; Anchorage Capital majority owner

By Caroline Salls

Pittsburgh, Sept. 10 – J.Crew Group, Inc. has completed its financial restructuring and emerged from Chapter 11 bankruptcy “well-positioned for long-term growth,” according to a Thursday news release.

The company’s second amended pre-packaged plan of reorganization was confirmed on Aug. 25 by the U.S. Bankruptcy Court for the Eastern District of Virginia.

As part of its financial restructuring, J.Crew said it has equitized more than $1.6 billion of secured debt, and Anchorage Capital Group, LLC has become the majority owner of the company.

To support ongoing operations and future growth initiatives, J.Crew Group is capitalized with a $400 million exit term loan due 2027 provided by Anchorage, as well as GSO Capital Partners LP and Davidson Kempner Capital Management LP, among others. In addition, the company has access to a new $400 million ABL credit facility due 2025 that is led by Bank of America, NA.

“Looking forward, our strategy is focused on three core pillars: delivering a focused selection of iconic, timeless products; elevating the brand experience to deepen our relationship with customers; and prioritizing frictionless shopping,” J.Crew chief executive officer Jan Singer said in the release.

Madewell chief executive officer Libby Wadle said “We will remain focused on maintaining our place as a leader in denim and innovating to create a differentiated shopping experience. We are also continuing to grow our offering of everyday essentials and are well positioned to lead the casualization trend.”

Weil, Gotshal & Manges LLP served as legal counsel, Lazard served as investment banker and AlixPartners, LLP served as restructuring adviser to J.Crew Group.

As previously reported, J.Crew filed bankruptcy to implement a transaction support agreement reached with holders of 71% of its term loan and 78% of its IPCo notes, as well as with its financial sponsors.

Under the agreement, the company said it will restructure its debt and deleverage its balance sheet, positioning J.Crew and Madewell for long-term success.

The lenders will convert $1.65 billion of debt into equity under the terms of the support agreement.

ABL facility claims will be paid in full in cash and related letters of credit will be cash collateralized.

About $2 billion of the company’s pre-bankruptcy secured term loans and secured notes will be equitized into the reorganized debtors’ equity, with 76.5% going to holders of secured term loan claims and 23.5% to holders of senior notes claims.

Holders of term loans and IPCo notes, which include 13% senior secured notes due 2021 and senior secured new-money notes due 2021, that are qualified institutional buyers or accredited institutional investors and that joined the support agreement within 10 business days of the bankruptcy filing date may elect to provide a portion of debtor-in-possession loans and new term loans.

New term loan lenders will receive 15% of the common equity of the reorganized debtors and warrants to acquire additional new common shares after the plan effective date.

Holders of ongoing trade claims will receive a preference claim waiver and a portion of a $71 million cash pool.

Other general unsecured creditors will receive a preference claim waiver and class 6-B GUC trust net assets.

All existing equity will be cancelled and holders will receive no recovery.

J.Crew is a New York-based retailer of women’s, men’s and children’s apparel, shoes and accessories. The company filed for Chapter 11 on May 4 under case number 20-32181.

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