J.Jill, with the support of a majority of the company’s shareholders, entered into a transaction support agreement with lenders holding more than 70% of the company’s term loans (the consenting lenders) on the principal terms of a financial restructuring that would result in a waiver of any past non-compliance with the terms of the company’s credit facilities and provide the company with additional liquidity.

As previously reported, according to an 8K filed with the SEC, CIT Finance and Jefferies Finance agreed to a further amendment to J.Jill’s forbearance agreement dated June 15, 2020, which extended the forbearance period by five days through Sept. 1. According to an additional 8K filed on Aug. 31, CIT and Jefferies “agreed to continue to forbear from exercising any rights and remedies under the respective credit agreements in respect of the defaults set forth in the existing forbearance agreements.”

If the financial restructuring is consented to by the requisite term loan lenders, the transaction will be consummated on an out-of-court basis. The out-of-court transaction would extend the maturity of certain participating debt by two years through May 2024. J.Jill is working with the consenting lenders to obtain the necessary consents.

In the event that the transaction does not receive the required consents, the parties to the TSA agreed to a prepackaged plan of reorganization under Chapter 11 of the United States Bankruptcy Code, the key terms of which have been negotiated, including additional financing during the Chapter 11 process. 

“J.Jill has been buoyed by a strong direct business and a loyal customer base, and the transaction proposed in this agreement will enable our company to emerge from this challenging stretch in a position of strength,” Jim Scully, interim CEO of J.Jill, said. “I am grateful for the confidence and support of many of our lenders and shareholders as we work together to advance the best interests of our employees, vendors and customers, and position our company for long-term success.”

The out-of-court transaction contemplated by the TSA will, among other things:

  • Extend the maturity of certain participating debt to May 2024
  • Waive all existing non-compliance with the terms of the company’s credit facilities
  • Grant a financial covenant holiday until Q4/21
  • Provide for a new money investment of no less than $15 million in the form of a junior term loan facility

If the transaction does not receive the required consents for the out-of-court transaction (or the company does not meet the other conditions to closing the out-of-court transaction), the TSA provides that the company will pivot to the in-court transaction, which will, among other things, provide for:

  • A new money investment of up to $75 million in the form of a debtor-in-possession facility
  • The conversion of the debtor-in-possession facility into a new term loan facility that matures five years after emergence

The closing of the out-of-court transaction is conditioned on the satisfaction or waiver of certain conditions precedent, including finalizing all definitive documents and achieving certain participation thresholds. Specifically, the transaction requires participation by lenders holding at least 95% of the outstanding principal amount of the company’s term loans by Sept. 11, 2020 (as such date and consent threshold may be modified as provided in the TSA).

Kirkland & Ellis is serving as legal counsel, Centerview Partners is serving as financial advisor and investment banker, and AlixPartners is serving as restructuring advisor to J.Jill. 

J.Jill is an omnichannel retailer and women’s apparel brand.