J Crew has become the first major US retailer to file for bankruptcy protection since the coronavirus lockdown was enforced.

The fashion chain, which operates more than 500 stores, made the Chapter 11 filing to buy itself some breathing space from creditors.

Chapter 11 protection acts in a similar way to a company voluntary arrangement (CVA) in the UK, postponing a US company’s financial obligations to creditors to give it time to refinance or sell parts of the business.

J Crew plans to hand control to its lenders, including the hedge fund Anchorage Capital Group, Blackstone-owned GSO Capital Partners, and Davidson Kempner Capital Management, in exchange for the cancellation of $1.65bn (£1.3bn) of debts.

The retailer’s chief executive Jan Singer said the agreement marked “a critical milestone in the ongoing process to transform our business”.

She described the plans as a “financial restructuring” that would “enable our business and brands to thrive for years to come”.

J Crew, which also owns the J Crew Factory and Madewell brands, has been weighed down by its debt pile and vast store network across the US.

It also operates six shops in the UK and has branches in Canada.

But in recent years J Crew has struggled to compete with cheaper fashion rivals such as H&M and Zara, as it fell out of fashion with customers.

J Crew will retain its Madewell brand and will continue to trade online during the bankruptcy proceedings.

A number of its stores are expected to remain closed even after lockdown restrictions are lifted as it moves to scale back its physical estate.

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