Century-old department store chain Belk Inc. said that it would file for bankruptcy with a deal in hand with its lenders and private-equity owner Sycamore Partners to cut $450 million in debt through a fast-track chapter 11 filing, WSJ Pro Bankruptcy reported. Sycamore, Belk’s owner since 2015, and lenders including KKR & Co. and Blackstone Group Inc. have committed to invest $225 million to recapitalize the company under restructuring terms that would shrink its $2.6 billion balance sheet. Belk said it planned to complete the prepackaged bankruptcy by the end of February and allow Sycamore to retain its majority stake. “As the ongoing effects of the pandemic have continued, we’ve been assessing potential options to protect our future,” Belk CEO Lisa Harper said Tuesday. “We’re confident that this agreement puts us on the right long-term path toward significantly reducing our debt…to continue investing in our business, including further enhancements and additions to Belk’s omnichannel capabilities.” The deal reflects Sycamore’s commitment to bricks-and-mortar retailers even after a wave of bankruptcy filings hit the sector last year following the temporary shutdown of most nonessential shopping amid the coronavirus pandemic. With nearly 300 stores mostly in the Southeast, Belk generated $3.8 billion in revenue in the 12 months ended November, according to Moody’s Investors Service. Belk has been slowing down payments to suppliers to conserve cash, according to a person familiar with the matter. Under the bankruptcy plan, Belk suppliers will continue to receive payment in the ordinary course for all goods and services, allowing the company to continue normal operations, the company said.
