J. Crew Group’s unsecured creditors believe the company is seriously underestimating the value of the business, alleging it is doing so in order to shortchange them on recoveries, YahooFinance.com reported. The valuation gap is a substantial one — more than $1 billion. The unofficial creditors’ committee in the case argues that its experts had conducted an “extensive investigation” of J. Crew’s finances and assets, and found that the company’s enterprise value was roughly $2.94 billion. That estimate places a significantly higher value on the business than J. Crew’s own revised estimate of $1.84 billion. J. Crew’s unsecured creditors argue that the company is worth substantially more than what its lenders are owed. J. Crew’s general unsecured creditors, including trade vendors, landlords and others, estimate they are owed roughly $150 million to $200 million in claims. In a bankruptcy, general unsecured creditors are fairly low in the hierarchy of who gets repaid, and usually stand to recover a fraction of what they are owed. That dynamic often results in contentious discussions around valuations. The creditors’ committee is also seeking to file its expert reports containing their valuation estimates under seal, as it hashes out with J. Crew which of the information contained in the reports needs to be kept confidential, and whether redacted versions of the reports can later be filed publicly.
