There have been speculations, since the start of the year, about Belk’s intent to file for Chapter 11 bankruptcy.
Finally it happened on Tuesday (23 February), when the American clothing retailer filed for bankruptcy protection, with a restructuring plan backed by lenders.
The restructuring plan would end the US $ 450 million in debt in addition to retaining its 291 stores and thereby saving 17,000 jobs. Importantly, the plan got its approval from the court after yesterday’s hearing.
Substantiating further, William Langley, CFO, Belk said to media that without speedy approval, the fashion retailer could be liquidated.
However, as per reports, there were objections too! The Department of Justice bankruptcy trustee had objected to the fast approval and said that speeding up the approval process would deny many stakeholders ‘sufficient time’ to study the restructuring plan.
William said that the restructuring plan will leave Sycamore Partners as the majority owner of Belk, with good support from lenders who represent almost all its term loan claims.
As with many retailers, Belk too was massively hit by the pandemic and so when the retailer expressed its intent to file for bankruptcy earlier this this year, it didn’t come as a surprise.
Notably, Belk entered Chapter 11 with a huge US $ 1.9 billion debt.