Once one among Charlotte’s high firms, Belk filed Chapter 11 bankruptcy in Houston late Tuesday. It’s the first step in the Charlotte retail icon’s reorganization plan that can see its proprietor, Sycamore Partners, cede a massive stake of the firm to its lenders whereas sustaining management.
If accredited, the bankruptcy plan is slated to present Belk a new infusion of capital and lower its debt load by about $450 million.
The listening to for the bankruptcy, which is predicted to be accomplished in a fast 24 hours, is scheduled for 3 p.m. EST Wednesday.
A bit of greater than 5 years since the Belk household offered the division retailer for about $3 billion, Belk found itself bankrupt after a daunting debt load, shifting shoppers tastes and a dying enterprise mannequin have been all magnified by the COVID-19 pandemic.
“The COVID-19 pandemic directly resulted in drastic declines in sales, revenue, and liquidity,” stated Belk Chief Financial Officer William Langley in a submitting related with the bankruptcy.
“Belk stands here today with an actionable and comprehensive solution to its capital structure and liquidity issues,” Langley stated.
After struggling financially for a lot of 2020, Sycamore introduced that Belk would file bankruptcy and restructure in January.
The bankruptcy won’t end result in the liquidation of the shops, as has occurred with different retail bankruptcies.
Belk has pledged to don’t have any layoffs or shops closures as a a part of the bankruptcy. Still, filings that Belk distributed to lenders trace that cuts might come after it’s out of bankruptcy.
On high of all of that, the long run sustainability of a division retailer like Belk is unsure.
Middlebrow department shops like Belk have seen curiosity wane for years, as shops like TJMaxx, Sephora and Lululemon took their consumers. In a bid to seize altering tastes, CEO Lisa Harper stated that Belk would emphasize dwelling items, outside attire and activewear going ahead, in accordance with the bankruptcy publication Reorg Research.
The bankruptcy has evoked bittersweet memories of many in the Charlotte space, for whom Belk was the place to purchase a promenade costume or their first job. With its headquarters on Tyvola Road in Charlotte, Belk has about 17,000 staff all through the South.
The Belk household that had managed the enterprise because it started in 1888 was lively in Charlotte’s civic and philanthropic life, and the Belk identify is omnipresent in Charlotte, on stadiums and freeways. While the shops will stay, the bankruptcy indicators a potential finish of an period the place Belk was not simply a native retailer however a civic establishment.
The venue for the bankruptcy, the Southern District of Texas, could seem a bit misplaced as a result of Belk has no shops in Houston. But the district is a (*11*).
U.S. bankruptcy legislation successfully lets firms select the place they go bankrupt. Belk joined Nieman Marcus and others in selecting the Houston venue the place the judges flip round main company reorganizations sooner than wherever else.
Belk’s plan to be in and out of bankruptcy in simply 24 hours is feasible as a result of Sycamore bought Belk’s collectors to approve phrases of the deal in advance in what’s generally known as a pre-packaged bankruptcy. Pre-approval leaves fewer folks with the means to boost objections and gum up the works of a bankruptcy that’s in-process.
In a sequence of proposed filings made in advance of Tuesday’s bankruptcy petition, Belk requested the court docket’s permission to permit it to proceed to do every little thing from paying staff to working its reward card program.
The bankruptcy decide, Marvin Isgur, will probably grant Belk’s requests, permitting the firm to proceed enterprise as ordinary for a time frame.
This is a creating story.