UPDATE: Belk Plans Pre-Packaged Chapter 11

Belk announced Tuesday it planned to complete a financial restructuring transaction through an expedited pre-packaged Chapter 11 bankruptcy reorganization set to reach completion by the end of February.

To execute the reorganization, Belk has entered into a restructuring support agreement with its private equity majority owner, Sycamore Partners, holder of more than 75% of its first lien term loan debt and holder of 100% of its second lien term loan debt, on a plan to recapitalize the business, significantly reduce debt by some $450 million and extend maturities on all term loans to July 2025.

Under the terms of the RSA, Sycamore Partners will retain majority control of Belk. The retailer received financing commitments for $225 million in new capital from Sycamore Partners, investment firms KKR and Blackstone Credit, and certain existing first lien term lenders. Pursuant to the RSA, members of an ad hoc crossover lender group led by KKR Credit and Blackstone Credit and other participating lenders will acquire a minority ownership in Belk.

Under the RSA, Belk will continue to pay suppliers in the ordinary course for all goods and services provided to the company. Belk plans to continue normal operations through its financial restructuring process, serving customers in store and online. The capital infusion, by design, should support Belk’s continued investment in strategic initiatives, including establishing a seamless omnichannel shopping experience and expanding Belk’s product offerings in home goods, outdoor and wellness.

“Belk has a 130-year legacy of providing quality products at great prices,” stated Lisa Harper, Belk CEO. “Like all retailers navigating COVID-19, our priority has been the safety of our associates, customers and communities. As the ongoing effects of the pandemic have continued, we’ve been assessing potential options to protect our future. We’re confident that this agreement puts us on the right long-term path toward significantly reducing our debt and providing us with greater financial flexibility to meet our obligations and to continue investing in our business, including further enhancements and additions to Belk’s omnichannel capabilities.”