The COVID-19 crisis drove clothing retailer J.Crew to file for Chapter 11 bankruptcy protection early Monday morning. The preppy fashion veteran is not going out of business at this point, having reached debt restructuring agreements with its major lenders.

J.Crew's bankruptcy details

J.Crew has worked out a bankruptcy deal with its lenders, restructuring $1.65 billion of the company's long-term debt into equity. In other words, lenders including Anchorage Capital Group, GSO Capital Partners, and Davidson Kempner Capital Management have traded in their debt claims in return for substantial ownership of the company. The deal includes $400 million of debtor-in-possession financing to J.Crew, which allows the stores to keep the lights on during the debt restructuring period.

"We will continue all day-to-day operations, albeit under these extraordinary COVID-19-related circumstances," CEO Jan Singer said in a statement. "As we look to reopen our stores as quickly and safely as possible, this comprehensive financial restructuring should enable our business and brands to thrive for years to come."

A group of businessmen in a field, getting in line to stand on a stepladder and wave a white flag.

Who's next in line to surrender? Image source: Getty Images.

Sign of the times

The novel coronavirus has not triggered a massive wave of retail bankruptcies yet, but J.Crew will probably be followed by many filings in May and June. High-end department store Neiman Marcus, luxury clothier Lord & Taylor, and mass-market mall anchor J.C. Penney (NYSE:JCP) may follow suit shortly. Bankruptcy filings from video game vendor GameStop (NYSE:GME) would not raise many eyebrows, either.

American retailers were already fighting for their lives against an onslaught of e-commerce alternatives such as Amazon.com (NASDAQ:AMZN) and the online operations of industry giant Walmart (NYSE:WMT) when the coronavirus pandemic accelerated this game-changing trend. Some Chapter 11 filers may survive under new ownership while others are on a path toward total liquidation.