J. Crew once again in debt restructuring talks

March 29, 2019

J. Crew’s financial situation threatens to imperil its efforts to revive its namesake brand and grow its smaller, but better-performing, denim banner. The apparel company remains saddled with $1.7 billion in debt even after prevailing in a debt swap scheme last year. It is down to a meager $25 million or so in cash, according to a press release.

Calling on outside experts to aid in debt reduction isn’t necessarily a sign of imminent bankruptcy, but it’s almost always more dire when a retailer is back at it within such a short amount of time, according to Pat Collins, a partner at Farrell Fritz with expertise in bankruptcy, restructuring and distressed retail.

“You’ve got to make your debt service payments and the amount you have to make capital improvements is gone,” he told Retail Dive in an interview. “Even scaling down is not easy — scaling down costs money. A lot of one-time expenditures would be necessary and without the free cash it’s very difficult.”

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