NEW YORK — J.Crew is the first national U.S. retailer to file for bankruptcy protection since the start of the coronavirus outbreak.
On Monday, the company said it filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court in the Eastern District of Virginia. J.Crew also said the company's lenders will convert about $1.65 billion of the company's debt into equity.
As of February, the company had nearly $1.7 billion in debt. However, J.Crew's parent company Chinos Holdings still plans to hold onto its Madewell brand.
"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," said Jan Singer, Chief Executive Officer, J.Crew Group in a statement.
"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," Singer added.
J.Crew, the internationally recognized retailer of women's, men's and children's apparel, shoes and accessories, has 181 retail stores, 140 Madewell stores and 170 factory stores.
CNN reports that a bankruptcy filing doesn't mean a company will go out of business. Many businesses use it to alleviate debt and other liabilities it can't afford.
However, more bankruptcies across the retail sector are expected in the coming weeks.
There are a number of retail chains that were already teetering at the start of the year, but the pandemic is wreaking havoc equally across the entire sector. J.Crew is not the first to seek protection during the coronavirus outbreak, and no one expects it to be the last.
J.C. Penney and Neiman Marcus are expected to follow J.Crew. Jeans maker True Religion Apparel Inc. filed for bankruptcy protection last month.
Clothing store sales plummeted 50.5% in March, according to the latest Commerce Department report, and it has grown worse since.
In its last full year of operations, J.Crew generated $2.5 billion in sales, a 2% increase from the year before.
The Associated Press contributed to this report.