Belk department store
John Greim | LightRocket | Getty Images
The Belk department store chain announced on Tuesday afternoon that it would file for Chapter 11 bankruptcy protection. This marks the youngest retailer in malls as its sales have declined and challenges have accelerated during the Covid pandemic.
The North Carolina-based retailer announced that it will be entering into a restructuring agreement with its majority owner, private equity firm Sycamore Partners, along with the owners of more than 75% of its term loan debt and 100% holders of its term loan debt.
Belk said it plans to recapitalize the business, reduce the debt burden by around $ 450 million, and extend the maturity of all term loans through July 2025. Sycamore will retain majority control over Belk under the agreement.
The company announced it has received funding commitments for $ 225 million in new capital from Sycamore, KKR and Blackstone, as well as some of its existing first-term lenders. The retailer said it plans to keep paying its suppliers and that all normal business operations will continue during the restructuring process.
She hopes to end Chapter 11 bankruptcy by the end of February.
"We are confident that this agreement will put us on the right long-term path to significantly reduce our debt and provide us with more financial flexibility to meet our commitments and continue to invest in our business, including further improvements and additions to our omnichannel capabilities von Belk, "said Lisa Harper, CEO of Belk, in a statement.
America's department store operators – including Belk and its nearly 300 stores mainly in the Southeast – are facing problems as consumers visit malls less often and buy fewer clothes during the pandemic.
Last year Neiman Marcus, J. C. Penney, Stage Stores and Lord & Taylor filed for bankruptcy. The latter, the oldest department store chain in the country, eventually liquidated and closed all of its stores. Penney narrowly escaped the same result after US owners Simon Property Group and Brookfield Property Partners acquired it.
Sycamore, a consumer and retail investment firm, recently bought womenswear brands Ann Taylor, Loft, Lou & Gray and Lane Bryant from bankruptcy from Ascena Retail Group.
Here is the full press release from Belk.
FIX: This story has been updated to say that Belk has announced plans to file for Chapter 11 bankruptcy. An earlier version incorrectly stated that the company had already filed.