While a raft of non-essential retailers have succumbed to Chapter 11 bankruptcy since the pandemic forced store shutdowns, J.Jill has reached a definitive agreement with its lenders to avoid that fate in an out-of-court settlement.
J.Jill’s lenders have agreed to give the company an
additional two years, through May 2024, to pay off its term-loan debt and to
provide an investment of “no less than $15 million” in the form of a
junior term-loan facility. The funds will provide “additional liquidity and
financial flexibility” for the specialty retailer to meet its obligations to
vendors and execute its business plan, the company said in a release.
Term loan lenders holding 97.8% of the outstanding principal amount under the company’s term loan facility, and shareholders holding a majority of the equity in the company, support the transaction. If J.Jill had not received backing from at least 95% of its lenders, the company previously had agreed to a prepackaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code.
On June 15, J.Jill announced that it violated the terms of “certain
covenants set forth in its asset-based (ABL) credit facility and term loan
credit facilities,” and it entered into two forbearance agreements to extend
payment deadlines for one month, which were subsequently extended several
The terms of the current transaction are intended to result
in forgiveness of past non-compliance with the company’s credit facilities. Completion
of the transaction, expected to close on or about Sept. 30., will waive noncompliance
with the terms of the ABL facility.
J.Jill was “teetering on the edge of filing for bankruptcy” after temporarily closing its more than 280 stores due to the pandemic, according to The Wall Street Journal. “The closures had hurt its revenue and cash flow, even after the company withheld rent payments, furloughed store employees and cut pay for executives and other workers.”