Today, Chinos Holdings, Inc. and its affiliates—including clothing brands J. Crew and Madewell—filed for Chapter 11 bankruptcy protection in the Richmond Division of the United States Bankruptcy Court for the Eastern District of Virginia. Attorneys from our Bankruptcy Team have reviewed the “first day” filings that will be heard tomorrow by the Honorable Keith L. Phillips. Telephonic hearing procedures will be used due to COVID-19.
Prior to filing bankruptcy, the debtors entered into a Restructuring Support Agreement with a group of lenders and bondholders to swap debt for an 82 percent stake in the reorganized debtors. That agreement contemplates that the bankruptcy proceedings will operate on an expedited timeline, with Plan Solicitation anticipated in July and Plan Confirmation to occur by September 1, 2020.
J. Crew currently operates 181 retail locations and 170 outlets; Madewell adds another 140 stores. All stores have been shuttered during the pandemic, but the debtors plan to reopen when lockdowns end. The debtors have requested streamlined lease rejection procedures and have indicated that Hilco Real Estate, LLC will begin communicating with landlords to negotiate lease terms. Moreover, the debtors are requesting authority to suspend rent payment obligations through July 6, 2020.
The debtors conduct business with over 200 merchandise vendors that operate hundreds of factories, as well as other vendors and logistics providers. The debtors are seeking authority to pay $20 million to certain critical vendors deemed essential to the operation of the J. Crew and Madewell businesses. Other general unsecured creditors are anticipated to receive their pro rata share of a much smaller pool, subject to Court approval.
If you have questions or needs regarding these bankruptcy proceedings, please contact a member of our Bankruptcy Team: