Reports: J.Crew, J.C. Penney, Neiman Marcus Group May File for Chapter 11 by Mid-May
Three high-profile, but struggling retailers — J.Crew Group, Neiman Marcus Group, and J.C. Penney Co. — may be preparing to file for Chapter 11 bankruptcy protection by mid-May, according to several reports. Here are some details:
- J.Crew is working to secure $400 million to fund operations in bankruptcy. The privately held retailer was already struggling with a heavy debt load, but its woes have been worsened by the coronavirus pandemic.
- As we reported last week, Neiman Marcus recently missed a $72 million interest payment on bonds owed in 2024, and has been on the cusp of filing for bankruptcy. Some expected the filing to come last week. The Dallas-based retailer is reported to be working with multiple lender groups as it looks to secure the debtor-in-possession financing that would see it through Chapter 11.
- J.C. Penney also missed an interest payment and has been exploring its options during a 30-day grace period, according to Reuters. And while one source close to the situation told Reuters that no decision has been made and that options other than bankruptcy remain on the table, another source familiar with the process said a filing could come May 14 or May 15.
Total Retail's Take: While it's difficult to prove that the coronavirus pandemic is solely responsible for all of these possible bankruptcies, a case can be made that it has certainly sped up the process. Retailers that came into the crisis heavily indebted are probably deciding that right now is the time to file for Chapter 11 since while they may be able to survive the immediate shutdown, it will be more difficult to survive the dire consumer landscape that lives on the other side. Simply put, both the shutdown and aftermath may create a toxic brew that could force these companies' hands to file for bankruptcies.