Belk Lenders Are Making an attempt to Keep away from Retailers Going Bankrupt: WSJ

Belk department store

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KKR, Blackstone and other major Belk lenders are in talks with the North Carolina-based department store chain to avoid bankruptcy, according to a report in the Wall Street Journal.

The company, its lenders and private equity firm Sycamore Partners are getting closer to an out-of-court deal, the report said, citing people familiar with the discussions.

Representatives from Belk, KKR and Blackstone did not immediately respond to CNBC’s requests for comment. Sycamore declined to comment.

A deal is not currently guaranteed, the Journal report warned, but Belk’s lenders have noted that the Chapter 11 bankruptcy process has proven difficult for a number of other retail chains during the Covid pandemic, with some being forced into liquidation.

KKR and Blackstone hope to convert a portion of Belk’s $ 2.6 billion debt into equity, possibly through an out-of-court deal that would allow Sycamore to keep an interest, the Journal said. KKR “is reluctant” to take Belk through bankruptcy proceedings because of the high fees associated with filing it, the report said.

America’s department store operators – including Belk and its nearly 300 stores, mostly in the southeast – are struggling as consumers visit malls less often and buy fewer clothes during the pandemic.

Last year Neiman Marcus, JC Penney, Stage Stores and Lord & Taylor filed for bankruptcy. The latter, the oldest department store chain in the country, eventually liquidated and closed all of its stores. Penney narrowly escaped the same result after US mall owners Simon Property Group and Brookfield Property Partners acquired it.

Sycamore recently acquired womenswear brands Ann Taylor, Loft and Lane Bryant from bankruptcy from Ascena Retail Group. The private equity firm also owns Staples, which last week made an unsolicited tender offer for the parent company of Office Depot ODP.