The pre-arranged restructuring plan is expected to help the company reduce debt by about $1 billion. In addition, Ascena Retail Group will be getting $150 million in fresh funds from existing lenders.

(Bloomberg)—Ascena Retail Group, the owner of the Ann Taylor and Lane Bryant apparel chains, filed for bankruptcy protection on Thursday after its business was thrown into disarray by the COVID-19 pandemic. Ascena is No. 38 in the 2020 Digital Commerce 360 Top 1000.The filing in U.S. Bankruptcy Court in the Eastern District of Virginia is the latest from retailers that were pushed over the edge by the nationwide closure of stores to combat the outbreak. Bankruptcy protection allows the company to avoid a permanent shutdown, cut its borrowings and close weak stores to minimize costs. More than 50,000 jobs could be affected, based on data from Ascena’s most recent annual report.

The company, which listed about $12.5 billion of debts, entered into a restructuring support agreement with over 68% of its secured term lenders, it said in a statement. The pre-arranged restructuring plan is expected to help the company reduce debt by about $1 billion. In addition, Ascena will be getting $150 million in fresh funds from existing lenders.

“With the cash generated from our ongoing operations and the new money financing commitments we received from our lenders, we expect to have sufficient liquidity to meet our operational obligations during the court-supervised process,” Carrie Teffner, Ascena’s interim executive chair, said in the statement. “We expect to move through this process on an expedited timeframe.”

Retailers, many already struggling with competition from online shopping, have been among the hardest hit by COVID-19. Lockdowns drained revenue, helping to tip companies including J.C. Penney Co. (No. 32), J. Crew Group Inc. (No. 47) and Neiman Marcus Group Inc. (No. 41) into bankruptcy.

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CEO Gary Muto temporarily shut about 2,800 stores in mid-March due to the outbreak. The Mahwah, New Jersey-based company began to re-open in early May as state authorities lifted restrictions. But foot traffic remained lower than normal, with store sales falling between 30% and 80% in the last three weeks of May, according to a June lender presentation, made public today.

Management forecasts revenues to fall 21% in the financial year ending August, with losses expected through to 2021, according to the presentation.

Even before the pandemic, Ascena was having financial troubles of its own aking, with sales sliding and borrowings that ballooned to more than $1 billion. The retailer was trying to sell two of its chains amid mounting losses and signs that creditors were losing confidence in its prospects, Bloomberg reported.

Under the restructuring plan, the company will close “a significant number” of Justice stores and also some Ann Taylor, LOFT, Lane Bryant and Lou & Grey outlets, it said in the statement.

The case is Ascena Retail Group, 20-33113, U.S. Bankruptcy Court in the Eastern District of Virginia.

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