Belk’s lenders seek to avoid bankrupting retailer: WSJ

KKR, Blackstone and other major Belk lenders are in talks with the North Carolina-based department store chain to prevent it from going bankrupt, according to a Wall Street Journal report.

The company, its lenders and private equity firm Sycamore Partners are moving closer to reaching an out-of-court settlement, the report said, citing people familiar with the talks.

Representatives for Belk, KKR and Blackstone did not immediately respond to CNBC’s requests for comment. Sycamore declined to comment.

A deal is not guaranteed at this point, the Journal report warned, but it said Belk’s lenders have noted how difficult the Chapter 11 bankruptcy process has been for a number. other retail chains during the Covid pandemic, some being forced to liquidate.

KKR and Blackstone hope to convert part of Belk’s $ 2.6 billion debt into equity, possibly through an out-of-court settlement that would allow Sycamore to retain a stake, the Journal said. . KKR is “reluctant” to subject Belk to a bankruptcy process in court because of the high fees associated with the filing, according to the report.

Operators of U.S. department stores – including Belk and its nearly 300 stores mostly in the southeast – have struggled as consumers visit malls less often and buy less clothing during the pandemic.

Last year, Neiman Marcus, JC Penney, Stage Stores and Lord & Taylor filed for bankruptcy. The latter, the oldest chain of department stores in the country, ended up liquidating and closing all of its stores. Penney narrowly escaped the same result after US shopping center owners Simon Property Group and Brookfield Property Partners acquired him.

Sycamore recently purchased women’s clothing brands Ann Taylor, Loft and Lane Bryant in the bankruptcy of Ascena Retail Group. The private equity firm also owns Staples, which last week made an unsolicited takeover bid for Office Depot’s parent company, ODP.