Department store seller Belk files for Chapter 11 bankruptcy

Department store chain Belk announced Tuesday afternoon that it has filed for Chapter 11 bankruptcy protection, which the mall’s newest retailer has done so as sales have declined and challenges have increased during the Covid pandemic.

The North Carolina-based retailer said it has entered into a restructuring support agreement with its majority shareholder, private equity firm Sycamore Partners, along with the holders of more than 75% of its first lien and holders of 100% of its loan on the second lien.

The plan, Belk said, is to recapitalize its operations, reduce its indebtedness by approximately $ 450 million and extend the terms of all its term loans through July 2025. Sycamore will retain majority control of Belk as part of the agreement. , he said. .

The company said it has received funding commitments of $ 225 million in new capital from Sycamore, KKR and Blackstone, along with some of its existing first lien lenders. The retailer said it plans to continue to pay its suppliers and that all normal business activities will continue during the restructuring process.

It hopes to emerge from Chapter 11 bankruptcy in late February.

“We are confident that this agreement will put us on the right path in the long term to significantly reduce our debt and provide us with greater financial flexibility to meet our commitments and continue to invest in our business, including further improvements and additions Belk’s omnichannel capabilities. ”said Lisa Harper, CEO of Belk, in a statement.

Department store operators in America – including Belk and its nearly 300 stores, mostly in the Southeast – have struggled as consumers go to malls less often and buy less clothes during the pandemic.

Last year, Neiman Marcus, JC Penney, Stage Stores and Lord & Taylor filed for bankruptcy. The latter, the oldest department store chain in the country, eventually liquidated and closed all of its stores. Penney narrowly escaped the same result after American mall owners Simon Property Group and Brookfield Property Partners acquired it.

Sycamore, a firm specializing in consumer and retail investments, also recently bought women’s clothing brands Ann Taylor, Loft, Lou & Gray and Lane Bryant from bankruptcy from Ascena Retail Group.

Here is the full press release.