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J.Crew Could File for Bankruptcy as Soon as This Weekend

J.Crew Group Inc. is reportedly laying the groundwork for a bankruptcy filing as the coronavirus pandemic further strains its struggling business.

According to The Wall Street Journal, the New York-based specialty retailer has held discussions with a group of lenders for “several weeks” since it shelved its proposed IPO for subsidiary Madewell in early March. A deal with lenders has yet to be reached, and a filing could emerge as soon as this weekend, people familiar with the matter told the news outlet.

J.Crew declined to comment for this story.

By taking Madewell public, J.Crew had expected to raise $100 million. It revealed plans to use the money “to repay indebtedness and to support our general corporate purposes.” At the time, it had been considering the brand’s spinoff for five months, as it sought to reduce its debt load of nearly $1.7 billion.

However, an erratic stock market due to investor panic over the COVID-19 outbreak led J.Crew to abandon the proposed IPO, initially scheduled to hit the market on March 2. (It announced that it would complete the transaction between March 18 and April 30, providing the chain with “additional time to thoroughly assess all alternatives,” but the offering never came to fruition.) What’s more, it joined the long list of retailers that had been forced to shutter stores in an effort to prevent the spread of the virus.

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Retail analysts have been down on J.Crew for some time, as disappointing financial results and executive turmoil plagued the retailer, which was taken private in a leveraged buyout in 2010. Around 2015, amid shifting consumer preferences and spending habits, the apparel and accessories company took on a massive expansion project and attempted to cater to a more upscale audience. A new loyalty program, collection launches and the debut of a third-party marketplace were unable to fix such missteps.

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