Vendor Belk, a department store, files for Chapter 11 bankruptcy

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

The North Carolina-based retailer said it signed a restructuring support deal with its majority owner, private equity firm Sycamore Partners, along with holders of more than 75% of its first loan debt. term and holders of 100% their second term loan debt.

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

The company said it has received $ 225 million in new capital financing commitments from Sycamore, KKR and Blackstone, along with some of its top lenders. The retailer said it plans to continue paying its sellers and will continue all normal business operations during the restructuring process.

Expect to come out of Chapter 11 bankruptcy by the end of February.

“We are confident that this agreement puts us on the right track in the long term to significantly reduce our debt and provide us with greater financial flexibility to meet our obligations and continue to invest in our business, including additional improvements and additions to capabilities. Belk Multichannel. ”Lisa Harper, CEO of Belk, said in a statement.

U.S. department store operators, including Belk and its nearly 300 stores, mostly in the southeast, have had problems because consumers don’t frequent malls so often and buy fewer 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, ended up liquidating and closing all its stores. Penney escaped the same result after U.S. mall owners Simon Property Group and Brookfield Property Partners acquired it.

Sycamore, a company that specializes in consumer and retail investments, also recently bought the women’s clothing brands Ann Taylor, Loft, Lou & Gray and Lane Bryant due to the bankruptcy of the Ascena Retail group.

Here is the full press release.