CLOSE

Brick and mortar stores that we thought would never disappear are now creating empty retail landscapes.

USA TODAY

Fashion retailer J. Crew filed for Chapter 11 bankruptcy protection Monday after the coronavirus pandemic undermined its turnaround plans.

J. Crew was on weak footing before the pandemic began, having racked up an unsustainable amount of debt from a private-equity buyout deal in 2011.

That debt meant the company was not well-positioned to deal with the same challenges that its competitors are facing, including declining mall foot traffic and increased interest in digital sales.

J. Crew has the sixth-most debt among distressed retailers, according to Moody’s Investor Service.

The company’s plan to spin off its promising women’s apparel business Madewell in 2020 was supposed to help the company pay down some of its debt.

But that deal apparently faltered when the coronavirus pandemic forced J. Crew and many other retailers to temporarily close its stores.

J. Crew said Monday that it had canceled plans to spin off Madewell.

COVID-19 fallout: Can these 10 retailers avoid permanent store closings amid coronavirus pandemic?

Home sales plunge: Coronavirus takes steam out of home buying season

Telecommuting: Working at home had a positive effect on productivity during the pandemic, survey shows

Instead, the company said it has reached a deal to convert $1.65 billion in debt to equity.

It was not immediately clear whether the company plans to close any stores as a part of its bankruptcy. As of Monday, the company operated 181 J. Crew retail stores, 140 Madewell locations and 170 factory stores in addition to its websites.

J. Crew representatives did not immediately respond to a request seeking comment.

“As we look to reopen our stores as quickly and safely as possible, this comprehensive financial restructuring should enable our business and brands to thrive for years to come,” J.Crew Group CEO Jan Singer said in a statement.

Some states have lifted or eased restrictions linked to coronavirus, prompting some businesses to reopen. Macy’s revealed last week it would open 68 stores on Monday in states that have eased restrictions.

Follow USA TODAY reporter Nathan Bomey on Twitter: @NathanBomey. Follow Brett Molina on Twitter: @brettmolina23.

Read or Share this story: https://www.usatoday.com/story/money/2020/05/04/j-crew-files-ch-11-bankruptcy-coronavirus-hammers-retailers/3076549001/