Belk, and its lenders including KKR and Blackstone, are attempting to avoid filing for Chapter 11 bankruptcy protection via an out-of-court deal, according to an article from CNBC that cites a Wall Street Journal report.
The department store chain, its lenders and private-equity firm owner Sycamore Partners are reportedly getting close to reaching a restructuring agreement that would help them avoid bankruptcy, the report said.
According to CNBC, “KKR and Blackstone are hoping 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 retain an ownership stake, the Journal said. KKR is ‘reluctant’ to take Belk through an in-court bankruptcy process because of the high fees associated with filing, the report said.”
Belk currently operates approximately 300 stores in malls located mostly in the Southeast. The pandemic has forced other struggling department store chains to file for bankruptcy or sell themselves to mall operators, including JCPenney, which was acquired by Simon and Brookfield last year.