Department store chain Belk files for Chapter 11 bankruptcy, private equity firm Sycamore to take control

Belk department store

John Greim | LightRocket | Getty Photography

The department store chain Belk offered Tuesday afternoon it has filed for Chapter 11 bankruptcy safety, marking essentially the most up-to-date mall-primarily primarily based fully retailer to blueprint in train its gross sales enjoy dwindled and challenges enjoy accelerated for the length of the Covid pandemic.

The North Carolina-primarily primarily based fully retailer said it has entered into a restructuring give a retract to agreement with its majority owner, deepest equity firm Sycamore Companions, in conjunction with the holders of extra than 75% of its first-lien time length loan debt, and holders of 100% of its second-lien time length loan debt.

The opinion, Belk said, is to recapitalize its alternate, nick its debt burden by roughly $450 million, and extend the maturities on all of its time length loans to July 2025. Sycamore will help majority take care of an eye on of Belk as share of the agreement, it said.

The company said it has obtained financing commitments for $225 million in contemporary capital from Sycamore, KKR and Blackstone, in conjunction with about a of its existing first-lien time length lenders. The retailer said that it plans to take care of paying its distributors and that each and each standard alternate operations will continue for the length of the restructuring course of.

It hopes to exit Chapter 11 bankruptcy by the reside of February.

“We’re confident that this agreement locations us on the gorgeous lengthy-time length course in direction of vastly reducing our debt and providing us with higher financial flexibility to meet our obligations and to continue investing in our alternate, in conjunction with additional enhancements and additions to Belk’s omnichannel capabilities,” Belk CEO Lisa Harper said in a assertion.

The US’s department store operators — in conjunction with Belk and its almost 300 stores primarily within the Southeast — enjoy struggled as buyers are no longer frequenting outlets as in most cases and are buying less apparel for the length of the pandemic.

Closing one year, Neiman Marcus, J.C. Penney, Stage Stores and Lord & Taylor filed for bankruptcy. The latter, the oldest department store chain within the nation, ended up liquidating and closing all of its stores. Penney narrowly escaped that identical final result after U.S. mall owners Simon Property Community and Brookfield Property Companions obtained it.

Sycamore, a firm that specializes in person and retail investments, additionally lately purchased the Ann Taylor, Loft, Lou & Gray, and Lane Bryant ladies people’s apparel producers out of bankruptcy from Ascena Retail Community.

Here’s the fat press initiate.