Belk files for bankruptcy and hopes to get rid of $450 million in debt

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Belk, the North Carolina-based department store chain that has served generations of shoppers for nearly 190 years, announced Tuesday that it will file for Chapter 11 bankruptcy.

The chain’s owner, private equity firm Sycamore Partners, said in a press release that Belk will continue with “normal operations” in the event of bankruptcy, The Charlotte Observer reported.

Sycamore Partners said it expects to emerge from bankruptcy by the end of February. It will retain majority control of Belk, according to an agreement reached with some of Belk’s creditors. A group of department store creditors, led by private equity firms KKR and Blackstone, will get a minority stake. The bankruptcy plan will help Belk get rid of about $450 million in debt.

“We are confident that this agreement puts us on the right long-term path to significantly reduce our debt and provide us with greater financial flexibility to meet our obligations and continue to invest in our business,” said Lisa Harper, CEO of Belk. , in a press release. .

The 133-year-old chain was born from the opening of a store in Monroe, North Carolina, by William Henry Belk in 1888. Three generations of the Belk family led the company to become the largest chain in family-owned department store in the country in 2015, when the family sold it for $3 billion.

The sale to Sycamore burdened the chain with more than $2 billion in debt at a time when department stores were losing popularity. The department store has struggled during the coronavirus pandemic as customers flocked to online shopping and avoided in-person purchases.

Belk laid off workers in March as the pandemic hit and slashed top executive pay by up to 50% as stores temporarily closed. In July, Belk cut an undisclosed number of jobs, mostly at its headquarters in Charlotte, North Carolina. This followed the loss of 80 corporate jobs in February.

Belk has more than 20,000 employees in its nearly 300 stores in 16 southeastern states. Its headquarters opened in 1988 in Charlotte and today has approximately 1,300 workers.

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