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Coronavirus Bankruptcies Are Coming

Already, companies large and small are succumbing to the effects of the coronavirus. They include household names like Hertz and J. Crew and comparatively anonymous energy companies like Diamond Offshore Drilling and Whiting Petroleum.

And the wave of bankruptcies is going to get bigger.

Edward I. Altman, the creator of the Z score, a widely used method of predicting business failures, estimated that this year will easily set a record for so-called mega bankruptcies — filings by companies with $1 billion or more in debt. And he expects the number of merely large bankruptcies — at least $100 million — to challenge the record set the year after the 2008 economic crisis.

Even a meaningful rebound in economic activity over the coming months won’t stop it, said Mr. Altman, the Max L. Heine professor of finance, emeritus, at New York University’s Stern School of Business. “The really hurting companies are too far gone to be saved,” he said.

Many are teetering on the edge. Chesapeake Energy, once the second-largest natural gas company in the country, is wrestling with about $9 billion in debt. Tailored Brands — the parent of Men’s Wearhouse, Jos. A. Bank and K&G — recently disclosed that it, too, might have to file for bankruptcy protection. So did Weatherford International, an oil field services company that emerged from bankruptcy only in December.

More than 6,800 companies filed for Chapter 11 bankruptcy protection last year, and this year will almost certainly have more. The flood of petitions from the worst economic downturn since the Great Depression could swamp the system, making it harder to save the companies that can be rescued, bankruptcy experts said.

Most good-size companies that go into bankruptcy try to restructure themselves, working out payment agreements for their debts so they can stay open. But if a plan can’t be worked out — or isn’t successful — they can be liquidated instead. Equipment and property are sold off to pay debts, and the company disappears.

Without reform in the system, “we anticipate that a significant fraction of viable small businesses will be forced to liquidate, causing high and irreversible economic losses,” a group of academics said in a letter to Congress in May. “Workers will lose jobs even in otherwise viable businesses.”

Among their suggestions: increasing budgets to recall retired judges and hire more clerks, and giving companies more time to come up with workable plans to prevent them from being sold off for parts.

“Tight deadlines may lead to overly optimistic restructuring plans and subsequent refilings that will congest courts and delay future recoveries,” they wrote.

The pandemic — with its lockdowns, which have just started to ease — was enough on its own to put some businesses under. The gym chain 24 Hour Fitness, for example, declared bankruptcy this week, saying it would close 100 locations because of financial problems that its chief executive attributed entirely to the coronavirus.

But in many cases, the coronavirus crisis exposed deeper problems, like staggering debts run up by companies whose business models were already struggling to deal with changes in consumer behavior.

Hertz has been weighed down by debt created in a leveraged buyout more than a decade ago, and added to it with the acquisition of Dollar Thrifty in 2012. As it was battling direct competitors, the ascent of Uber and Lyft further upended the rental-car industry.

J. Crew and Neiman Marcus were carrying heavy debt loads from leveraged buyouts by private equity firms while struggling to deal with the changing preferences of shoppers who increasingly buy online.

Credit…Mandel Ngan/Agence France-Presse — Getty Images

Oil and gas companies like Diamond and Whiting borrowed heavily to expand when commodities prices were much higher. Those prices started to fall as production increased, and plunged further still when Russia and Saudi Arabia got into a price war shortly before the economic shutdowns began.

(And then there are cases that have nothing to do with the pandemic but nonetheless take up time and energy in the courts. Borden Dairy, a Dallas company with a history that goes back to 1857, declared bankruptcy in January, a victim of declining prices, rising costs and changing tastes.)

A run of defaults looks almost inevitable. At the end of the first quarter of this year, U.S. companies had amassed nearly $10.5 trillion in debt — by far the most since the Federal Reserve Bank of St. Louis began tracking the figure at the end of World War II.

“An explosion in corporate debt,” Mr. Altman said.

Having a lot more debt to deal with is likely to make the coming bankruptcies a bruising experience for unsecured creditors, who may include retirees with pensions or health benefits, vendors waiting to be paid, tort plaintiffs whose lawsuits are cut short and sometimes even current workers. If a company goes into bankruptcy with more secured debts than the value of its assets, the secured creditors — including vulture investors who bought up the debt for a song — can walk away with virtually everything.

The sums at play in some of these cases will be enormous. Mr. Altman expects at least 66 cases with more than $1 billion in debt this year, eclipsing 2009’s mark of 49. He also predicted 192 bankruptcies involving at least $100 million in debt, which would trail only 2009’s record of 242.


Credit…Cindy Ord/Getty Images

Robert J. Keach, a director of the American College of Bankruptcy, said many companies had so far managed to put off bankruptcy by amassing cash and conserving it as best they can: drawing down existing credit lines, furloughing workers, delaying projects and taking advantage of federal and state pandemic-relief programs.

But when those programs expire, the companies will start burning through their cash. That’s when bankruptcy filings are likely to soar and stay elevated, Mr. Keach said.

Expect “a Covid-19 cliff” in the next 30 to 60 days, he said.

Companies that received loans under the federal Paycheck Protection Program may be waiting to file, said Mr. Keach, who practices bankruptcy law with the firm of Bernstein Shur in Portland, Maine. The loans can be converted to grants if the companies meet certain requirements, and if the borrowers can put off bankruptcy until they’re sure they won’t have to pay the money back, they will have more cash when they file.

That’s an important consideration, because Chapter 11 is expensive. A bankrupt company must pay the fees of the lawyers and other professionals that help it reorganize, as well as the fees of those who advise the official creditors’ committees.


Credit…Tony Dejak/Associated Press

The experts’ recommendations to Congress walk a fine line. They suggest allowing companies more time to come up with reorganization plans, even though Chapter 11 cases are supposed to move quickly so bankrupt companies don’t burn through their cash before they reorganize.

Generally, the longer a company stays in bankruptcy, the greater the chances of a liquidation. And that increases the likelihood that the company’s troubles will spread: Suppliers of raw materials could fold if a manufacturer languishes in bankruptcy, and smaller stores in entirely differently lines of business can suffer if a shopping-mall anchor can’t stay open.

These risks are real, said Robert E. Gerber, who retired in 2016 as a bankruptcy judge in the Southern District of New York. One of his cases was the 2009 bankruptcy of General Motors, which moved at lightning speed to keep the automaker from going under for good.

“If G.M. had failed, God knows how many companies in the supply chain would have failed, and this would have snowballed terribly,” said Mr. Gerber, who is now of counsel with the Joseph Hage Aaronson firm. The cascade would have wiped out paychecks to workers throughout the supply chain, threatening other businesses and even the finances of the local governments that count on them for tax revenue.

That, Mr. Gerber said, makes it imperative that the bankruptcy system have the resources to deal with the coming rush of cases.

“Bankruptcy can’t print money for those companies,” he said, “but it can give a good number of them a chance of survival.”

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J.C. Penney Files for Bankruptcy, Closing Some Stores

J.C. Penney, with its budget-friendly clothing for families and reliable home furnishings, was for years a cornerstone of American malls and an undeniable success story. What started as a humble dry goods store in Wyoming in 1902 was a century later a national chain with a household name and more than 1,000 locations.

But on Friday, the company filed for bankruptcy protection after a prolonged decline over the past 20 years, becoming the latest and largest retailer to fall during the coronavirus pandemic, which has devastated the industry. The chain has more than 800 stores and nearly 85,000 employees.

Its collapse follows other retail bankruptcies this month including J. Crew, the Neiman Marcus Group and the designer men’s clothing brand John Varvatos. But J.C. Penney represents the biggest casualty by far based on the number of locations, with stores that are anchors at many of the nation’s malls.

J.C. Penney said it filed for Chapter 11 protection from its creditors in federal bankruptcy court for the Southern District of Texas, adding that it had $500 million in cash on hand and had received commitments for $900 million in financing to use during the bankruptcy process. The company said it had struck a deal with lenders that would reduce several billion dollars of its debt and it would explore a sale. It also said it planned to close stores, but specific locations and timing would be disclosed in coming weeks.

Jill Soltau, J.C. Penney’s chief executive, said that the retailer expected to emerge from “Chapter 11 and this pandemic as a stronger retailer.”

The filing was expected after J.C. Penney failed to make an interest payment on its debt in April to “maximize financial flexibility,” and then skipped another payment last week. The stock of the chain, based in Plano, Texas, has been trading below $1 per share for most of this year.

Credit…Oscar White/Corbis, via VCG, via Getty Images

The bankruptcy represents the fall of an American institution that traces its roots to Kemmerer, Wyo., where its founder, James Cash Penney Jr., invested in a dry-goods store called the Golden Rule. He soon renamed it J.C. Penney, but was devoted to the notion of the Golden Rule, particularly in how the company treated its workers, and shared its profits with staff from its early days.

By the 1990s, the company was viewed as a respectable shopping destination that was more affordable than Macy’s but more upscale than discount outlets.

“It was synonymous with value,” said Stacey Widlitz, president of SW Retail Advisors, an independent research firm.


Credit…Bettmann, via Getty Images

Most department store chains have been in a long period of decline, and the massive footprint of J.C. Penney at mid-tier malls has been especially challenging.

But J.C. Penney’s demise was accelerated in the past decade by the involvement of William A. Ackman, the hedge fund manager, and Ron Johnson, the former retail chief at Apple, who were behind one of the most disastrous retail turnaround attempts in recent history.

Mr. Ackman, an activist investor and chief executive of Pershing Square Capital Management, bought a major stake in J.C. Penney in 2010 and subsequently joined its board, seeing an opportunity at the retailer, which was losing ground to rivals like Kohl’s and Macy’s.

He recruited Mr. Johnson, who joined in late 2011 and planned to transform J.C. Penney’s stores into collections of boutiques with a “town square,” banish nonstop promotions and strike up partnerships with higher-end designers like Nanette Lepore.

But Mr. Johnson’s efforts alienated J.C. Penney’s core customers, led to sales and traffic declines and created internal rifts. He was ousted after 17 months in April 2013. In one year, J.C. Penney had seen $4.3 billion, or 25 percent, of its annual sales wiped out.

“It is not easy to get a customer back but it is easy to lose one,’’ said Christina Boni, senior credit officer at Moody’s Investors Service. “They made some strategic choices that in hindsight were not the best to make.”


Credit…Chang W. Lee/The New York Times

J.C. Penney has cycled through chief executives since then, but the downward trend has persisted. Even with a 14-year partnership with Sephora, the cosmetics chain with shops inside hundreds of J.C. Penney locations, it has found it difficult to appeal to younger customers.

“They’re not luxury, they’re not as cheap as Walmart and T.J. Maxx, they don’t have the niche stuff at specialty retailers,” said Barbara E. Kahn, a marketing professor at the University of Pennsylvania’s Wharton School. “It’s stuck in the middle with no differentiation.”

The company had been making progress in recent months toward slimming down its inventory and improving its merchandise presentation, Ms. Boni said. But J.C. Penney was also struggling with a debt load more than three times that of other large mall-based retailers, giving it less financial flexibility to invest in online initiatives and other efforts to win back customers.

Still, the company had managed to avoid bankruptcy longer then another similar mall-based retailer, Sears, which filed for Chapter 11 protection in October 2018.


Credit…Carter Johnston for The New York Times

Since its bankruptcy, Sears has been trying to survive with a smaller footprint. But in February, the company that now owns Sears and Kmart, Transformco, closed an additional 96 stores, citing “increased competition and other factors.”

When J.C. Penney closes stores, it could have major implications for the mall landscape in the United States, which was already struggling with a widening chasm between the most popular and least-favored shopping destinations. It could leave vast and unappealing empty spaces at many malls. And it could also allow smaller retailers to leave, based on agreements that are often contingent on the presence of anchors like J.C. Penney.

“When a J.C. Penney or a Macy’s goes out, it’s like a snowball effect,” Ms. Widlitz said.

Green Street Advisors, a real estate research firm, said in a report last month that it expected more than half of all mall-based department stores to close by the end of 2021. It also said it expected J.C. Penney to eventually liquidate, even if it emerged from bankruptcy in the short term, saying that “a smaller store fleet is not going to solve J.C. Penney’s core issues.”

The company’s sales have steadily shrunk in recent years to $10.7 billion for the year that ended Feb. 1, when it posted a net loss of $268 million from continuing operations.

“J.C. Penney was already experiencing market share declines before Covid-19,” Ms. Boni said. “It would be difficult to turn around a business in this environment.”

Contact Sapna Maheshwari at and Michael Corkery at

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The Coronavirus Pandemic Helped Topple J. Crew and Neiman Marcus. So Did Private Equity.

J. Crew and Neiman Marcus were each facing a host of issues before the coronavirus pandemic forced them to close their stores and eventually file for bankruptcy, including trouble adjusting to the rise of e-commerce and a lack of connection with a new generation of shoppers.

But they also shared one increasingly common problem for retailers in dire straits: an enormous debt burden — roughly $1.7 billion for J. Crew and almost $5 billion for Neiman Marcus — from leveraged buyouts led by private equity firms. Like many other retailers, J. Crew and Neiman over the past decade paid hundreds of millions of dollars in interest and fees to their new owners, when they needed to spend money to adapt to a shifting retail environment. And when the pandemic wiped out much of their sales, neither had anywhere to go for relief except court.

“Much of the difficulty that the retail sector is experiencing has been aggravated by private equity involvement,” said Elisabeth de Fontenay, a professor at the Duke University School of Law who specializes in corporate finance. “To keep up with everybody’s switch to online purchasing, there really needed to be some big capital investments and changes made, and because these companies were so debt strapped when acquired by private equity firms, they didn’t have capital to make these big shifts.”

The filings by J. Crew and Neiman Marcus followed a wave of retail bankruptcies in the past few years, and came as numerous chains, including J.C. Penney, teetered on the brink because of the pandemic.

In July, a report from the Center for Popular Democracy, a progressive advocacy group in Brooklyn, said 10 of the 14 largest retail chain bankruptcies since 2012 involved companies that private equity firms had acquired.

Barneys New York went into liquidation in November, and Zac Posen, owned by Yucaipa Companies, closed the same month. In March 2019, the North American operation of the Italian brand Roberto Cavalli declared bankruptcy when its private equity owner, Clessidra, failed to sell its stake. In early April, the British department store chain Debenham’s filed for protection for the second time in less than a year.

“You need so much money to keep the stores open, so much money to keep the inventory flowing — an average department store will have 2,500 brands — you need to invest in building, you need to invest in staffing, and most P.E. firms don’t want to make investment before they start seeing the return,” said Marigay McKee, founder of MM Luxe Consulting and a former president of Saks Fifth Avenue.

Private equity firms have been involved with retailers for decades. But the collapse of Toys “R” Us in 2017 put a spotlight on how major buyouts by the firms could go sideways. The chain had been burdened with $5 billion in debt from a 2005 leveraged buyout by the private equity firms Bain Capital and Kohlberg Kravis Roberts and the real estate firm Vornado Realty Trust, and it did not have sufficient funds to invest in its stores and e-commerce business during a crucial period of growth for Amazon and Walmart.

It was eventually liquidated, and more than 30,000 workers were laid off. The workers were not paid severance — even as creditors, bankruptcy lawyers and consultants received payments — until they lobbied pension funds, which invest heavily in funds managed by private equity firms. The situation galvanized politicians and union activists and spurred public outrage.

Credit…Justin Lane/EPA, via Shutterstock

J. Crew, which owns Madewell, and Neiman Marcus, which owns Bergdorf Goodman, have vowed to stay in business, but bankruptcies inevitably raise questions about what the future holds for employees, stores and vendors.

The bankruptcies have also shown how running retail companies requires a specific skill set, particularly when it comes to fashion.

Clothing is an almost entirely discretionary purchase, dependent not just on cycles within the economy but on consumer taste and the images of the brands themselves. Private equity funds often find themselves “seduced a little by the hypified names,” said Sandeep Dahiya, an associate professor of finance at Georgetown University.

Private equity has been flirting with fashion retail since at least 1987, when the Bahrain-based Investcorp began buying shares in the beleaguered family-run Italian brand Gucci, turning the loss-making company around. It cashed out in an initial public offering in 1996, setting a model for the industry and paving the way for such deals as TPG’s 1999 purchase of Bally, Permira’s 2007 acquisition of Valentino Fashion Group and the triple flip of Jimmy Choo from Equinox to Lion Capital to TowerBrook.

Carlyle acquired 48 percent of the Italian fashion brand Moncler in 2008, right as its puffer jackets exploded in popularity. It exited in 2014, the year after Moncler went public. Other private equity deals had mixed results, but Carlyle’s success — combined with a booming luxury sector, especially in Asia, and the lure of real estate embodied by store networks — enticed private equity investors. They saw retail as a cash-generating business, with management often composed of founders or families that could be shaken up and streamlined.

“Retail used to be kind of a golden goose for private equity firms, because in order for an LBO to work, the company has to be fairly mature with fairly regular cash flows,” Ms. de Fontenay said. “Under normal conditions, that’s kind of the definition of retail.”


Credit…Stephen Speranza for The New York Times

It “works out just fine as long as the economy and sector you’re invested in continues to grow,” she added. “If the sector is shrinking, it has been bad news.”

Neiman Marcus was first taken off the market for about $5.1 billion in a 2005 leveraged buyout by TPG and Warburg Pincus. The company was then sold in 2013 to a group led by the private equity firm Ares Management and the Canada Pension Plan Investment Board in a $6 billion deal.

Steve Dennis, founder of SageBerry Consulting and a Neiman Marcus strategy executive from 2004 to 2008, said he knew of at least one firm that backed away from the price tag of the second sale “based on the significant amount of growth to justify it.”

“Anything that would take more than a trivial amount of capital and have a longer payout time doesn’t generally fit with a private equity model,” Mr. Dennis said.

Neiman Marcus filed to go public in 2015, but an I.P.O. never materialized. The company, which said in court filings that it employed about 13,200 people, including 9,500 full-time staff, has spent much of the last two years trying to restructure its roughly $5 billion in debt, on which it has paid hundreds of millions of dollars in interest. Its revenue was $4.9 billion in its last public annual report, which was for the year that ended in July 2018.

Moody’s said last May that Neiman Marcus’s debt levels had reached “unsustainable levels.”

One of Neiman Marcus’s most valuable assets — the luxury e-commerce retailer MyTheresa — was not part of the bankruptcy filing. A group of bondholders have been arguing since 2018 that MyTheresa’s assets were improperly transferred to the company’s owners, leaving little to protect holders of the company’s unsecured debt.


Credit…Bryan Anselm for The New York Times

Marble Ridge Capital, a hedge fund that holds some of Neiman’s bonds, wrote in a public letter to the owners last month that “you have left a carcass of a company for the remaining stakeholders and have put both Neiman’s storied franchise and thousands of jobs at risk.”

Alex Yankus, a representative for Ares, declined to comment. Darryl Konynenbelt, a representative for the Canada Pension Plan Investment Board, declined to comment.

Amber Seikaly, a spokeswoman for Neiman Marcus, said that since 2014, the company had “invested over $1 billion of capital into our business,” including in new and existing stores, technology and its digital presence.

J. Crew has also faced a rocky road after its $3 billion leveraged buyout by TPG and Leonard Green & Partners in 2011. It weathered fashion missteps, management changes, quality complaints and a general identity crisis. But its debt and related expenses also ate up cash that hurt the company’s ability to reinvest in its products, supply chain and e-commerce platforms.

Americans for Financial Reform, a consumer advocacy group, estimated that J. Crew had paid more than $760 million in dividends and fees to its ownership group since 2011. Those distributions are shared with investors in funds managed by the private equity firms.

Before it began furloughs during the pandemic, J. Crew had 13,000 employees worldwide, with 4,000 full-time workers, according to court documents.

Luke Barrett, a representative for TPG, said that the bankruptcy was “a significant disappointment for everyone” and that the investment “ultimately created loss for both TPG and our investors.”

“When Covid-19 forced the closure of the company’s entire store operations, we worked quickly to modify the capital structure and create a new ownership structure that will serve the long-term interests of J. Crew, its employees and its customers,” he said.


Credit…Haruka Sakaguchi for The New York Times

A representative for Leonard Green declined to comment.

“One of the defenses of private equity right now is, they’re saying these are structurally declining businesses already, and, look, that is a part of it,” said Andrew Park, a senior policy analyst at Americans for Financial Reform. “But again, having to service that debt makes these businesses hard, and when you see these companies blatantly taking money away, that’s the element that has really led to criticism.”

Mr. Dahiya, the Georgetown professor, said he expected more bankruptcies from retailers backed by private equity firms given the current environment and that he thought it could potentially become a political issue.

“If there is a big retail bankruptcy or liquidation with a lot of job losses and P.E. is involved,” he said, “that would be like catnip to politicians, because retail is something that touches you and me, unlike, say, chemicals.”

Peter Eavis contributed reporting.

Contact Sapna Maheshwari at or Vanessa Friedman at

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J. Crew Likely to File for Bankruptcy in Virus’s First Big Retail Casualty

J. Crew, the mass-market clothing company whose preppy-with-a-twist products were worn by Michelle Obama and appeared at New York Fashion Week, is expected to file for bankruptcy protection as soon as Monday. It would be the first major retailer to fall during the coronavirus pandemic, though other big industry names including Neiman Marcus and J.C. Penney are likewise struggling with the devastating toll of mass shutdowns.

J. Crew has been in negotiations with lenders on how to handle its debts for weeks, according to two people with knowledge of the situation, who spoke on the condition of anonymity because discussions were confidential. The retailer’s board was expected to confer on Sunday evening and J. Crew could file for Chapter 11 bankruptcy protection as soon as Monday, the people said. The company on Sunday declined to comment.

The pandemic has been disastrous for the already weakened retail industry. In March, sales of clothing and accessories fell by more than half. The numbers for April are expected to only be worse, because many stores were open for at least some of March (e-commerce, a relatively small contributor to total sales for most store chains, is not enough to make up for the closures).

Retailers have furloughed employees, slashed executive salaries and hoarded cash in a desperate attempt to survive until the shutdowns are lifted. And there is widespread acknowledgment that J. Crew, which also owns the popular millennial denim brand Madewell, is not likely to be the only retailer to face the brink.

J. Crew was carrying a debt burden of $1.7 billion based on a leveraged buyout in 2011 by two private-equity firms — TPG Capital and Leonard Green & Partners — even before the coronavirus brought clothing sales to a near-halt in the 182 stores, 140 Madewells and 170 outlets it was running as of early March. And it had struggled to adapt to changing consumer tastes.

But in recent months it seemed to be making strides toward a more viable future. The company recently hired a new chief executive and was planning an initial public offering of Madewell this spring in order to pay down some of the debt and rehabilitate the J. Crew brand.

The coronavirus scuttled those plans and eventually toppled the company.

J. Crew started life in 1947 as a family-run low-priced clothing line for women called Popular Club Plan, and in 1983 it was renamed and reinvented as a catalog company selling turtleneck tops and crewneck sweaters in “Preppy Handbook” shades. It made the leap to household name and 21st century fashion fairy tale in late October 2008 when Mrs. Obama, whose husband was then the Democratic candidate for president, appeared on “The Tonight Show With Jay Leno.” This was just days after it had been revealed that Sarah Palin, the Republican candidate for vice president, had been given a costly wardrobe makeover by her party. “I want to ask you about your wardrobe,” Mr. Leno said to Mrs. Obama. “I’m guessing about 60 grand? Sixty, 70 thousand for that outfit?”

“Actually, this is a J. Crew ensemble,” Mrs. Obama replied, referring to her $148 yellow pencil skirt, $148 yellow and brown print tank top and $118 matching yellow cardigan. “Ladies, we know J. Crew. You can get some good stuff online!”

It was a priceless marketing moment. After that, everyone knew J. Crew, which seemed to embody the high/low mix-and-match trend of the moment.

The company was purchased by TPG in 1997 in a leveraged buyout from the founding Cinader family, and was taken public in 2003 — only to be reacquired for approximately $3 billion by TPG and Leonard Green & Partners nearly a decade ago.

Its creative director, Jenna Lyons, who had first joined as part of the design team in 1990, became a boldface name, known for her black-rimmed glasses, gangly frame and love of sequins and camouflage. Newspaper reports crowed about the comeback of the company’s chief executive, Millard S. Drexler, who had previously led Gap Inc. for years. Mr. Drexler, who goes by Mickey, became famous for riding his bicycle around the office and checking in with store associates via speakerphone.

In 2011 J. Crew became the first mass-market accessible brand to breach the high fashion parapet and present at New York Fashion Week. Vogue crowned the brand “a significant voice in the conversation on American style.” As the face of the brand, Ms. Lyons attended the Met Gala and, in 2014, played a role on the HBO show “Girls.”

In 2017, however, after two years of falling sales, Ms. Lyons left the company. J. Crew, the criticism went, had gone too fashion, falling into the trap of prizing quirk over quality and pricing itself out of practicality. And it had never focused enough on e-commerce. Madewell, its younger, simpler — “more authentic” — sister brand, acquired by Mr. Drexler in 2006, was the company’s new shining star. Indeed, after Ms. Lyons left, Madewell’s designer, Somsack Sikhounmuong, who had switched over to J. Crew in 2015, took the top creative spot. Much was made of a return to core values.

It was too little, too late. For a fashion brand to thrive it must be either needed or wanted. J. Crew, sitting somewhere in the netherland of style and price, was neither. A few months after Ms. Lyons’s departure, Mr. Drexler stepped down and two months later, Mr. Sikhounmuong left, starting a round robin of executives and designers. That served ultimately to confuse rather than clarify the identity of the company and its strategy. Jan Singer, formerly of Nike and Victoria’s Secret, was named as J. Crew’s newest leader in January.

Madewell, which filed for an I.P.O. in the fall, was expected to go public this spring while J. Crew remained private, but those plans were ultimately scrapped in March, which added a new wave of pressure and question marks to J. Crew’s future.

Now the question is whether the upheaval of the retail industry — which predates the pandemic, with the collapse of Barneys New York late last year — will continue.

“The companies going into bankruptcy, for the most part, were companies that were struggling before Covid — we have not seen true Covid-only bankruptcies,” said James Van Horn, a partner at the law firm Barnes & Thornburg and a specialist in retail bankruptcy.

However, he added, “depending on how the current situation continues, that may change.”

For instance, Brooks Brothers, another quintessential American shopping institution, is already facing questions about its future.

“In the ordinary course of business, Brooks Brothers consistently explores various strategic options to position the company for growth and success, in partnership with its financial advisers at P.J. Solomon,” a spokesman said, in response to question about a potential sale.

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How Outdoor Voices, a Start-Up Darling, Imploded

Last summer, Tyler Haney, the founder and chief executive of Outdoor Voices, appeared to be golden.In just five years, the Instagram-friendly athletic apparel company that she created in her 20s had become a sensation. There was more than $50 million in funding, nine stores and appearances on the business conference …

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