Belk Department Store
John Greim | LightRocket | Getty Images
KKR, Blackstone and other major creditors at Belk are in talks with the North Carolina-based department store chain to keep it out of bankruptcy, according to a report by the Wall Street Journal.
The company, its creditors and private equity firm Sycamore Partners are approaching an out-of-court settlement, 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 guaranteed at this point, warned the Journal report, but said Belk’s creditors watched as the Chapter 11 bankruptcy process proved difficult for a number of other retail chains during the Covid pandemic, with some being forced to liquidate.
KKR and Blackstone hope to convert a portion of Belk’s $ 2.6 billion debt into shares, possibly through an out-of-court settlement that would allow Sycamore to maintain a stake, the newspaper said. KKR is “reluctant” to bring Belk into bankruptcy in court because of the high fees associated with the lawsuit, the report said.
America’s department store operators – including Belk and its nearly 300 stores, mainly in the southeast – have struggled as consumers visit malls less often and buy less clothing 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, ended up liquidating and closing all its stores. Penney narrowly escaped that same result after American mall owners Simon Property Group and Brookfield Property Partners acquired it.
Sycamore recently bought the women’s clothing brands Ann Taylor, Loft and Lane Bryant from Ascena Retail Group. The private equity firm also owns Staples, which last week made an unsolicited offer to acquire ODP, the parent company of Office Depot.