J.Crew in talks with restructuring specialists for the second time in months

New York - J. Crew Group Inc is in talks with restructuring advisors for the second time in the last six months, in an attempt to wrangle falling sales and mounting debts.

The company's decision to seek help with its debt once again underscores the persistent business challenges J. Crew faces despite recent turnaround and financial restructuring efforts, reports Reuters, citing sources close to the matter.

The same sources said that the American retailer would have enlisted restructuring attorneys at Weil, Gotshal & Manges LLP, the law firm that helped negotiate a previous debt workout for the company and most recently steered department store operator Sears through bankruptcy proceedings. Additionally, Weil lawyers with capital markets and mergers and acquisitions expertise are also thought to be involved in the discussions.

Bankruptcy filing is not on the horizon for J.Crew

In a statement to Reuters on Thursday, the company did not directly address whether it has approached restructuring lawyers, but said it has "been evaluating and executing on opportunities to strengthen J. Crew's balance sheet" and that its top priority this year is to return its flagship brand to profitability and sustain momentum for its growing Madewell apparel business.

"The J.Crew brand delivered disappointing results in 2018 as many new strategies we deployed were ultimately not successful and negatively impacted our financial performance," said Michael J. Nicholson, president and CEO, in a statement issued earlier this week.

J. Crew was taken private in 2011 by TPG Capital and Leonard Green & Partners in a 3 billion dollars leveraged buyout. Eight years later, the retailer carries a debt load exceeding 1.7 billion dollars, according to sources quoted by CNBC News. A bankruptcy filing is not currently on the horizon for J. Crew though, the latter said.

A TPG spokesman declined to comment while representatives for Leonard Green and Weil have not yet responded to different media requests for comment.

It´s worth recalling that a couple of years ago, in 2017, J. Crew in 2017 reached a deal with creditors, including Blackstone's GSO Capital Partners and Anchorage Capital Group, on a debt exchange that helped cut in half about 567 million dollars in bond obligations. Additionally, the fashion group managed to extend their due date by two years.

Image: J.Crew website