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Leonard Green and TPG-led Owner Group Collected $765 Million in Fees and Dividends From Bankrupt Retailer J. Crew

Clothing retailer J. Crew, which is owned by private equity firms TPG and Leonard Green & Partners, filed for Chapter 11 bankruptcy today.[i] It is the first major retailer to file for bankruptcy during the COVID-19 pandemic. While the pandemic’s impact has been catastrophic for the retail industry as a whole, J. Crew’s already-precarious financial position, due in part to its owners’ aggressive financial policies, left it particularly vulnerable to the crisis. Over the course of their ownership, TPG and Leonard Green paid themselves hundreds of millions of dollars in management fees and debt-funded dividends.[ii]

TPG and Leonard Green have owned J. Crew since 2011 when they took it private it a $3 billion leveraged buyout. It was the second time TPG owned the company; it first purchased J. Crew from its founders in 1997 and took it public in 2006. [iii] 

J. Crew never recovered from the debt burden imposed by TPG and Leonard Green’s buyout, which stood at $1.7 billion in March.[iv] High leverage and interest payments as high as $30 million a quarter did not stop the private equity firms from enriching themselves through debt-financed dividends and monitoring fees.

J Crew dividends and fees to ownership group
($ millions)

Year Dividends Fees Combined
2019 $0.0 $7.6 $7.6
2018 $0.0 $10.0 $10.0
2017 $0.0 $9.7 $9.7
2016 $0.0 $10.0 $10.0
2015 $0.0 $10.3 $10.3
2014 $0.0 $10.4 $10.4
2013 $484.0 $9.9 $493.9
2012 $197.5 $9.1 $206.6
2011 $0.0 $7.4 $7.4
Total $681.5 $84.4 $765.9

Source: J Crew SEC filings

Over the last decade, more than 597,000 people working at private equity-owned retailers have lost their jobs due to bankruptcies and store closures.

J. Crew is owned by Green Equity Investors V and TPG Partners VI.


[i]https://jcrewgrouprestructuring.com/our-announcement/

[ii]J. Crew SEC filings.

[iii]https://www.bloomberg.com/news/articles/2010-11-23/j-crew-agrees-to-be-bought-by-tpg-leonard-green

[iv]https://investors.jcrew.com/static-files/7e60f08e-e8c7-454b-8b7c-d78ec412efcc

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