A New York Supreme Court Justice sided with J. Crew Group Inc in a dispute with some of its senior lenders, allowing the U.S. preppy retailer to move forward with a restructuring deal to cut its $2.1 billion debt pile.

The lenders had asked Justice Shirley Werner Kornreich to halt the deal because it unfairly gave collateral in the company, the J. Crew brand, to J. Crew's junior creditors. Kornreich denied the lenders' request because she said they did not show they would have success litigating it moving forward.

The lenders can still pursue the case even though they lost an initial battle, but J. Crew is taking steps to dismiss the lawsuit. The small group of lenders is led by Eaton Vance Management and Highland Capital Management LP and they hold about $160 million of the term loan.

The restructuring deal is supposed to help J. Crew avoid bankruptcy, a fate many of its peers have faced as retail goes through a major shift stemming from increasing consumer preference to shop online.

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Restructuring experts have been closely watching J. Crew because its deal could be a blueprint for other retailers with strong brand names to slash their debt without filing for bankruptcy. J. Crew is using its brand name to issue new debt to buy back existing bonds at a discount, helping it de-lever and avoid repayments for an additional two years.

Millions in attorney fees had been spent trying to work out the restructuring deal J. Crew has achieved, Kornreich said.

"On the other side is 10 to 12 percent of the (lenders) who say 'Blow it up,'" she said.

Attorneys for the lenders argued that J. Crew needed approvals from all of the holders before making changes to agreements that permit its restructuring. The retailer had secured 88 percent approval.

Moody's Investors Service published a report last month that named leather goods retailer Cole Haan, luxury label VINCE and canvas shoeseller TOMS Shoes as stressed brands that could pursue a path like J. Crew's.

J. Crew had said in court papers that if the judge halted the deal by granting the lenders a so-called injunction, it would "devastate J. Crew's restructuring efforts and operations, with dire consequences for J. Crew and all of its stakeholders, including creditors and thousands of employees."