J.Jill’s financial saga has finally turned a corner.
After five extensions of a forbearance agreement, the women’s specialty apparel chain finally received an early holiday gift from lenders, which agreed to throw the retailer the equivalent of a “stay out of bankruptcy” card as it moves forward with a financial restructuring plan.
Term loan lenders holding 97.8 percent of the outstanding principal amount under a loan facility and shareholders holding a majority of the company’s equity have agreed on an out-of-court consensual financial restructuring plan.
The plan, once completed, will extend the maturity of the participating debt by two years through May 2024, and it provides for a “financial covenant holiday until the fourth quarter of 2021.” The retailer will also receive no less than $15 million in new money in the form of a junior term loan.
J.Jill said the transaction is expected to close on or about Sept. 30. All vendor claims will be paid once all parties have finalized the transaction.
By avoiding a tour of bankruptcy proceedings under Chapter 11, the Boston-area women’s wear company can now avoid hunting down a debtor-in-possession credit facility. More important, J.Jill can continue to operate on its own without the need to obtain bankruptcy court approval for any operating decision management elects to take on, such as closing stores or even opening them. And by avoiding bankruptcy court supervision, it also won’t have to worry about the possibility of being sold to a third party, giving existing management more time to focus solely on turning around operations.