J. Crew defers rent payments

J. Crew can hold off on worrying about its rent woes for two months. A bankruptcy court in Virginia via a virtual hearing ruled that J. Crew can defer rent payments through July 6, about 60 days after it filed for Chapter 11 protection at the beginning of this month.

The judge in the ruling said that while there are enough states relaxing shelter-in-place rules due to the coronavirus pandemic, J. Crew is still facing significant challenges that justify the deferment of rent payments. To date, only 7 of J. Crew's stores have opened. By the end of this month the company is hoping to have 137 stores open, and by June they are hoping to have 330 stores open. In total, J. Crew has 500 leases in the United States, and monthly lease obligations of 20 million dollars.

Although J. Crew filed for bankruptcy, companies in bankruptcy still have to pay their ongoing bills. In the hearing, J. Crew cited companies including Pier 1 and Modell's Sporting Goods who have managed to defer administrative costs, such as rent.

Landlords in these cases have tried to argue that now that lockdown restrictions are being lifted that companies should no longer be allowed to defer payments, but companies have said in light of ongoing safety concerns, they are slow and steady to reopen stores, thereby affecting their business. J. Crew also said that even if they were to reopen all stores legally allowed to reopen right now, that doesn't guarantee customers will return to stores.

J. Crew has a 400 million dollar debtor-in-possession plan that proposes an interim budget banking on rent extensions. The plan also provides exit financing that J. Crew expects to pay their administrative costs, including their unpaid rent.

photo: via J. Crew Facebook page