NEW YORK, United States — Ascena Retail Group Inc., the struggling owner of the Ann Taylor and Lane Bryant clothing chains, is seeking $150 million of new capital from its lenders to fund operations during a bankruptcy reorganization, according to people with knowledge of the plans.

The retailer is closing in on a restructuring plan that would also let creditors install new board members, the people said. The new money portion of the so-called debtor-in-possession loan may pay 2.5% interest and would be backed by existing lenders, they added, saying that plans are fluid and could change.

In addition to the fresh financing, the DIP loan will also include about $160 million of existing debt that will become exit financing when Ascena completes the in-court restructuring process, said the people. Mahwah, New Jersey-based Ascena didn’t immediately return messages seeking comment.

Ascena is looking to use the bankruptcy process to turn its roughly $1.2 billion existing term loan into a less than $100 million obligation, the people said. It will either pay down or exchange the remaining debt into equity in the reorganized company, the people said. Lenders who provide a portion of the new money are slated to get a 100% stake in the Ascena’s post-bankruptcy equity, while those who don’t may get less than 50%, they added.

Existing lenders Monarch Alternative Capital and Bain Capital, who are among the largest and most active funds in the restructuring process, will each get to appoint a member to the company’s board, the people said.

A representative for Monarch didn’t immediately respond to requests for comment. A spokesman for Bain declined to comment.

Bloomberg previously reported that Ascena was preparing to file for bankruptcy and shutter at least 1,200 of its 3,000 stores. A Chapter 11 filing allows a company to keep some of its stores and brands operational while selling others in a court-supervised process.

Ascena shut its shops in mid-March as the Covid-19 pandemic spread and began to re-open locations in early May as state authorities lifted restrictions. Customer traffic is much lower than normal at stores that are open, the company said in a statement in May.

Retailers nationwide have been forced to file for bankruptcy as stores were ordered closed and consumers sharply cut back on their spending on discretionary goods. J.C. Penney Co., Neiman Marcus Group Inc. and J. Crew Group Inc. all filed for bankruptcy in May. RTW Retailwinds Inc., the parent company of New York & Co., sought court protection last week.