J.Crew has reached an agreement with its lenders holding approximately 71  per cent of its Term Loan and approximately 78 per cent of its IPCo Notes, as well as with its financial sponsors, under which the company will restructure its debt and deleverage its balance sheet, positioning J.Crew and Madewell for long-term success.

Under the terms of the Transaction Support Agreement (TSA), the company's lenders will convert approximately $1.65 billion of the company's debt into equity. The voluntary filing under Chapter 11 is to facilitate the restructuring contemplated by the TSA, the company said in a statement.

As part of the TSA, Madewell will remain part of J.Crew Group, Inc. Libby Wadle will continue in her role as CEO of Madewell.

"This agreement with our lenders represents a critical milestone in the ongoing process to transform our business with the goal of driving long-term, sustainable growth for J.Crew and further enhancing Madewell's growth momentum," said Jan Singer, chief executive officer, J.Crew Group. "Throughout this process, we will continue to provide our customers with the exceptional merchandise and service they expect from us, and we will continue all day-to-day operations, albeit under these extraordinary COVID-19-related circumstances. As we look to reopen our stores as quickly and safely as possible, this comprehensive financial restructuring should enable our business and brands to thrive for years to come."

The company has filed a series of customary "first day" motions with the Bankruptcy Court seeking to maintain its operations during the restructuring process to help facilitate a smooth transition into Chapter 11.

J.Crew Group is an internationally recognised omni-channel retailer of women's, men's and children's apparel, shoes and accessories. As of May 4, 2020, the company operated 181 J.Crew retail stores, 140 Madewell stores, jcrew.com, jcrewfactory.com, madewell.com and 170 factory stores.

Fibre2Fashion News Desk (RKS)