Belk bankruptcy plan gains judge’s approval

CHARLOTTE, N.C. — A judge approved the Chapter 11 bankruptcy plan for North Carolina-based Belk on Wednesday, creating a new infusion of capital and cutting the debt load for the 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 struggles with the ongoing covid-19 pandemic. It’s the first step toward owner Sycamore Partners transferring 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 plan. Still, filings that Belk distributed to lenders hint that cuts could come after the company exits bankruptcy.

Sycamore got almost all of Belk’s creditors to approve the terms of the deal in advance, according to the newspaper, in what’s known as a pre-packaged bankruptcy. Preapproval left fewer parties with the ability to raise objections and affect the bankruptcy process.

Belk Chief Financial Officer William Langley said in a filing accompanying the bankruptcy plan 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 it cut senior staff pay by up to 50% as stores temporarily closed.

Belk has approximately 17,000 employees at its 291 stores in 16 Southeastern states. Its corporate offices, which opened in 1988 in Charlotte, now have about 1,300 workers.