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J.Jill avoids bankruptcy – at least for now

J.Jill has once again bought itself more time — 10 days — to avoid a bankruptcy filing. 

The struggling women’s apparel retailer, which had had several extensions of two forbearance agreements it entered into in June, said that most of its lenders and shareholders support an out-of-court financial restructuring transaction. J.Jill plans to file for bankruptcy, however, if it fails to get lenders holding 95% of its term loans to support the plan by Sept. 11

The plan would extend the company’s debt maturities for two years, through May 2024, enabling J.Jill “to strengthen its balance sheet and better position itself for long-term growth,” the retailer stated. 

The out-of-court plan, which has the support of lenders holding 70% of J. Jill’s debt, would also grant a financial covenant holiday and provide for at least $15 million of new cash in the form of a junior term loan.

If the retailer does file for bankruptcy, it has an accord with lenders to get at least $75 million of debtor-in-possession financing that will convert to a term loan.

“J.Jill has been buoyed by a strong direct business and a loyal customer base, and the transaction proposed in this agreement will enable our company to emerge from this challenging stretch in a position of strength,” said Jim Scully, interim CEO. “I am grateful for the confidence and support of many of our lenders and shareholders as we work together to advance the best interests of our employees, vendors and customers and position our company for long-term success.”

J.Jill warned in June that the challenges related to the pandemic had raised “substantial doubt” about its ability to survive.

Kirkland & Ellis is serving as legal counsel to the company, and Centerview Partners is its financial adviser and investment banker. AlixPartners is J. Jill’s restructuring adviser.

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