Fashion firm J Crew has filed for bankruptcy protection, making it the first big US retailer to fall victim to the coronavirus pandemic.
Under the terms of the filing, its main creditors are set to take control of the group in exchange for cancelling its debts of $1.65bn (£1.3bn).
They are also providing about $400m of fresh financing to keep J Crew’s operations afloat.
Its 500 stores have been closed by the pandemic and some will not reopen.
However, the firm has not yet disclosed how many outlets will disappear.
Control of the group will now pass into the hands of Anchorage Capital Group, GSO Capital Partners and Davidson Kempner Capital Management, which hold large amounts of its debt.
As well as J Crew, the group also owns denim clothing specialist Madewell, which it had planned to spin off as a separate entity before the outbreak of the virus.
J Crew chief executive Jan Singer described the move as a “comprehensive financial restructuring” aimed at allowing the business “to thrive for years to come”.
“Throughout this process, we will continue to provide our customers with the exceptional merchandise and service they expect from us, and we will continue all day-to-day operations, albeit under these extraordinary Covid-19-related circumstances,” she added.
Kevin Ulrich, chief executive of Anchorage Capital Group, said: “J Crew and Madewell are two classic American brands with deeply loyal customers.
“The significant deleveraging contemplated by this agreement, coupled with J Crew Group’s strategy to strengthen its robust e-commerce platform to drive continued growth in its direct-to-consumer segment, will position the company for future success,”