Belk Inc. could become the first major department store chain to go bankrupt in 2021.
The Charlotte, N.C.-based retailer is reportedly close to filing for Chapter 11 protection. According to Bloomberg, which cited people familiar with the matter, it plans to enter into a deal that would provide its lenders with an ownership stake in the company through a “pre-arranged restructuring” of its debt.
The publication added that the terms weren’t final, and the deal is still subject to change. The report comes a week after The Wall Street Journal suggested that the retailer was in discussions with KKR & Co. Inc., Blackstone Group Inc. and other big lenders to keep it out of bankruptcy.
FN has reached out to Belk for comment.
The retail sector continues to face similar challenges to those of last year, when the COVID-19 health crisis took hold in the United States. Hundreds of thousands of storefronts and offices remained shuttered for weeks as the outbreak spread from coast to coast, which led to a decline in footfall at brick-and-mortar outposts and subsequently put a dent in retailers’ balance sheets. Many struggled with mounting debt, leading some big players in the industry — like JCPenney and Neiman Marcus — to file for bankruptcy protection in a bid to rescue their businesses.
Back in November, just ahead of the critical holiday shopping season, reports indicated that Belk fell months behind on payments to some vendors in a bid to shore up liquidity. Separately, over the summer, it laid off an unspecified number of workers who were furloughed primarily from its corporate office as the pandemic continued to slam its business.
Belk currently operates nearly 300 stores across 16 states in the Mid-Atlantic and the South. The 133-year-old company was purchased for $3 billion in 2015 by private equity firm Sycamore Partners, which recently snapped up bankrupt Ann Taylor parent Ascena Retail Group Inc. in a $540 million agreement.