Customers and employees of the region’s Belk department stores won’t see any local changes from the 133-year-old retail chain’s expected Chapter 11 bankruptcy filing, Belk Senior Director, Commun-ications, Jennifer Anderson told the Times News on Thursday.
“We are open for business,” Anderson said. “We do not anticipate any store closings or layoffs in conjunction with this financial restructuring, including our stores in Kingsport, Johnson City, and Bristol. Belk will remain open for business, and our customers will continue to receive the quality merchandise and service they expect when shopping at Belk’s nearly 300 stores across the Southeast and at belk.com.”
On Tuesday it was announced Belk had entered into a restructuring support agreement, or RSA, with its majority owner, Sycamore Partners, and holders of more than 75% of its first lien term loan debt and holders of 100% of its second lien term loan debt.
Belk expects to complete the financial restructuring transaction through an expedited “pre-packaged” reorganization under Chapter 11 of the U.S. Bankruptcy Code.
That hasn’t happened yet, Anderson noted.
But the expected filing led to a flurry of national news coverage that left some members of the public with questions about the future for their local Belk stores.
“We have not filed for bankruptcy, but once we do file, we expect to be out of Chapter 11 by the end of February as we have reached an agreement with our sponsor and a majority of our lenders on the terms of a prepackaged plan,” Anderson said.
New capital, less debt
Under the terms of the agreement, Sycamore Partners will retain majority control of Belk.
The retailer has received financing commitments for $225 million in new capital from Sycamore Partners, leading global investment firms KKR and Blackstone Credit, and certain existing first lien term lenders. The agreement’s plan to recapitalize the business also significantly reduces debt by approximately $450 million, and extends maturities on all term loans to July 2025.
“These actions will strengthen Belk financially as we continue to serve our customers normally,” Anderson said. “Our policies and commitment to providing quality service and merchandise are unchanged. The shopping experience with Belk, whether in our stores or online, will be the same that our customers have come to know, love and expect.”
Belk CEO Lisa Harper, in a company statement issued Tuesday when the restructuring support agreement was announced:
“Belk has a 130-year legacy of providing quality products at great prices. Like all retailers navigating COVID-19, our priority has been the safety of our associates, customers and communities. As the ongoing effects of the pandemic have continued, we’ve been assessing potential options to protect our future. We’re confident that this agreement puts us on the right long-term path toward significantly reducing our debt and providing us with greater financial flexibility to meet our obligations and to continue investing in our business, including further enhancements and additions to Belk’s omnichannel capabilities.”
From the statement issued Tuesday:
Charlotte-based Belk, Inc., a privately owned department store, opened its first store in 1888, beginning a legacy of selling great products at great prices, treating customers like family and giving back to the community. Today, Belk serves customers at nearly 300 Belk stores in 16 southeastern states, at belk.com and through the mobile app. Belk has proudly put customers and community at the center of what they do, supporting local charities, organizations and families when they need it most.