The fashion company is the first big US retailer to collapse during the pandemic. The firm’s creditors will take control in exchange for cancelling debts of $1.65bn (£1.3bn).
They are also providing about $400m (£320m) of fresh financing to J.Crew’s operations.
There will also be store closures however the number has not been confirmed.
It comes after the retailer’s 500 shops were temporarily shut in response to the coronavirus pandemic.
Anchorage Capital Group, Blackstone Group Inc’s GSO Capital Partners and Davidson Kempner Capital Management will take control of the group, which also owns denim brand Madewell.
J.Crew chief executive officer Jan Singer said: “This agreement with our lenders represents a critical milestone in the ongoing process to transform our business with the goal of driving long-term, sustainable growth for J.Crew and further enhancing Madewell’s growth momentum.
“Throughout this process, we will continue to provide our customers with the exceptional merchandise and service they expect from us, and we will continue all day-to-day operations, albeit under these extraordinary COVID-19-related circumstances.
“As we look to reopen our stores as quickly and safely as possible, this comprehensive financial restructuring should enable our business and brands to thrive for years to come.”
Kevin Ulrich, chief executive officer of Anchorage Capital Group, added: “J.Crew and Madewell are two classic American brands with deeply loyal customers.
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“We look forward to supporting Jan, Libby and the management team to recognise their full potential.
“The significant deleveraging contemplated by this agreement, coupled with J.Crew Group’s strategy to strengthen its robust e-commerce platform to drive continued growth in its direct-to-consumer segment, will position the Company for future success.”
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