J.Jill Inc. has managed to avoid filing for bankruptcy.
The struggling womenswear retailer announced late last night that it has obtained the necessary consents from its term loan lenders to move forward with an out-of-court restructuring transaction. According to a statement, the agreement not only frees the company from its financial covenants, but also extends certain debt maturities and provides its business with additional liquidity to continue operations amid the coronavirus pandemic.
With the deal, J.Jill is able to defer certain debt payments to 2024 and waive all existing non-compliance with the terms of its credit facilities. It has also been granted a financial covenant holiday until the fourth quarter of 2021 and received a new cash infusion of $15 million in the form of a junior term loan. It is expected to close on or about Sept. 30.
“The transaction provides J.Jill with the financial flexibility to continue to meet its obligations to its vendors in full and continue to execute on its business plan,” the company added in a press release.
Altogether, the lenders hold 97.8% of J.Jill’s term loans. The chain said early this month that it would’ve sought Chapter 11 protection if it was unable to get approval from the lenders, who hold 95% of its term loans by Sept. 11.
“J.Jill has been buoyed by a strong direct business and a loyal customer base, and the transaction proposed in this agreement will enable our company to emerge from this challenging stretch in a position of strength,” interim CEO Jim Scully said on Sept. 1.
Over the past several months, the Quincy, Mass.-based retailer has been teetering on the brink of insolvency as its forbearance period has been extended multiple times by lenders. To reduce expenses, it previously drew down $33 million under its revolving credit facility, as well as furloughed store associates, cut back on the base salaries of its executive officers and foregone its board of directors’ fees. It also revealed plans to permanently shutter 11 locations this year — most of which are expected to close in the second quarter — for a total of 275 remaining stores by the end of fiscal 2020.