Belk’s Lenders Seek to Avoid Bankruptcy of Retailers: WSJ

KKR, Blackstone and other major creditors to Belk are in talks with the North Carolina department store chain to keep it out of bankruptcy, according to a Wall Street Journal report.

The company, its creditors and the private equity firm Sycamore Partners are much closer to reaching an out-of-court settlement, the report said, citing people familiar with the talks.

Representatives of Belk, KKR and Blackstone did not immediately respond to CNBC’s requests for comment. Sycamore declined to comment.

A deal is not guaranteed at this time, the Journal report warned, but Belk lenders noted how the Chapter 11 bankruptcy process proved difficult for a number of other retail chains during the Covid pandemic. , some being forced to liquidate.

KKR and Blackstone hope to convert part of Belk’s $ 2.6 billion debt into equity, possibly through an out-of-court settlement that would allow Sycamore to hold a stake, the Journal said. KKR is “reluctant” to take Belk through bankruptcy proceedings in court because of the high fees associated with filing, the report said.

Operators of department stores in America – including Belk and its nearly 300 stores, mostly in the Southeast – have struggled as consumers frequent malls less often and buy fewer items of clothing during the pandemic.

Last year, Neiman Marcus, JC Penney, Stage Stores and Lord & Taylor filed for bankruptcy. The latter, the oldest department store chain in the country, ended up liquidating and closing all its stores. Penney escaped the same result after US mall owners Simon Property Group and Brookfield Property Partners bought it.

Sycamore recently acquired the women’s clothing brands Ann Taylor, Loft and Lane Bryant from the Ascena Retail Group. The private equity firm also owns Staples, which last week made an unsolicited takeover bid for ODP parent Office Depot.