CHARLOTTE, N.C. (AP) -- A judge approved Chapter 11 bankruptcy plans for North Carolina-based Belk on Wednesday, creating a new infusion of capital and cutting the debt load for the beleaguered department store chain.
The judge approved the plan during a hearing in Houston, The Charlotte Observer reported. The move provides the ailing chain with financial breathing room as it wrestles with the ongoing COVID-19 pandemic. It's the first step in a plan in which owner Sycamore Partners transfers a large stake of the company to its lenders while maintaining control.
"This is a rare Chapter 11, your honor, where everyone wins," Steven Serajeddini, a lawyer for Belk, told Bankruptcy Judge Marvin Isgur at a Wednesday morning hearing.
"Nobody wanted to see a liquidation here," Serajeddini said. Belk pledged to have no layoffs or store closures as a part of the bankruptcy. Still, filings that Belk distributed to lenders hint that cuts could come after it exits bankruptcy.
Sycamore got almost all of Belk's creditors to approve the terms of the deal in advance in what's known as a pre-packaged bankruptcy, according to the newspaper. Preapproval left fewer parties with the ability to raise objections and affect the bankruptcy process.
Chief Financial Officer William Langley said in a filing accompanying the bankruptcy that the COVID-19 pandemic led directly to drastic declines in sales, revenue and liquidity. Belk furloughed workers in March as the pandemic hit and cut senior staff pay up to 50% as stores temporarily closed.
In July, Belk cut an undisclosed number of jobs, mostly at its headquarters in Charlotte. The cut followed the elimination of 80 corporate jobs in February.
Belk has approximately 17,000 employees at its nearly 291 stores in 16 Southeastern states. Its corporate offices opened in 1988 in Charlotte and now have about 1,300 workers.