J.Jill Extends Forbearance Again as It Inches Toward Bankruptcy
J.Jill has been granted yet another extension to its forbearance period.
The womenswear retailer and its lenders have further amended its existing agreements, which were originally set to expire on June 15. Following an extension through today, the forbearance period now expires on Aug. 6 — prior to which lenders cannot exercise any rights and remedies against the company.
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The move allows J.Jill to complete negotiations with lenders. It is currently exploring various financial options as it continues to grapple with cash flow challenges that have worsened amid the coronavirus pandemic.
Speculation has also mounted about a potential bankruptcy filing: The company indicated in a few Securities and Exchange Commission filings that it faced “substantial doubt” about its ability to continue as a going concern. To reduce expenses, it has drawn down $33 million under its revolving credit facility, as well as furloughed store associates, reduced the base salaries of its executive officers and foregone its board of directors’ fees.
Yesterday, J.Jill revealed plans to permanently shutter 11 locations this year — most of which are expected to close in the second quarter — for a total of 275 remaining stores by the end of fiscal 2020. The announcement was included in J.Jill’s first-quarter report, which showed a net loss of $70.3 million versus the prior year’s income of $4.4 million. At the end of the first quarter, the chain had roughly $54.8 million in cash.
“As we previously disclosed, we took quick and decisive action during the period to leverage our direct channel while focusing on cost management and cash generation,” CEO James Scully said in a statement on Tuesday. “As we look ahead, we are continuing to monitor the evolving macro backdrop while working to strengthen our financial position.”
In a Tuesday filing with the SEC, the company reported that CFO Mark Webb was offered a cash retention award equal to his annual base salary and target bonus, which totaled $875,385. (The executive would be required to pay back those incentive funds if he exits J.Jill prior to July 30, 2021, barring a qualifying termination.) On the other hand, chief marketing and brand development officer Brian Beitler, who submitted his resignation last week, will depart the company on Aug. 1.
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