Retailer Belk files for Chapter 11 bankruptcy

Department store chain Belk announced on Tuesday afternoon that it has filed for Chapter 11 bankruptcy protection, marking the last mall-based retailer to do so as sales have declined and the challenges accelerated during the Covid pandemic.

The North Carolina-based retailer said it has entered into a restructuring support agreement with its majority owner, private equity firm Sycamore Partners, as well as holders of more than 75% of its senior term debt and holders of 100% of its second-ranking term debt.

The plan, Belk said, is to recapitalize its business, reduce its debt burden by approximately $ 450 million, and extend the maturities of all of its term loans until July 2025. Sycamore will retain majority control of Belk as part of the deal, he said. .

The company said it had received funding commitments of $ 225 million in new capital from Sycamore, KKR and Blackstone, as well as some of its existing senior term lenders. The retailer said it plans to continue paying its suppliers and that all normal business activities will continue during the restructuring process.

He hopes to emerge from Chapter 11 bankruptcy by the end of February.

“We are confident that this agreement puts us on the right long-term path to significantly reduce our debt and give us greater financial flexibility to meet our obligations and continue to invest in our business, including further enhancements and additions to capabilities. Belk omnichannel, ”said Lisa Harper, CEO of Belk, in a statement.

Operators of U.S. department stores – including Belk and its nearly 300 stores primarily in the southeast – have struggled as consumers do not frequent malls as 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 its stores. Penney narrowly escaped the same result after US shopping center owners Simon Property Group and Brookfield Property Partners acquired him.

Sycamore, a consumer and retail investment firm, also recently acquired the bankrupt Ann Taylor, Loft, Lou & Gray and Lane Bryant womenswear brands from Ascena Retail Group.

Here is the full press release.