The Chapter 11 filing allows the giant department store chain to stay in business and work out a way to pay its bills. Some of the chain’s stores will be closed permanently, with locations to be disclosed in the coming weeks, and the company could be put up for sale, J.C. Penney said in a
While the sudden shock from the coronavirus outbreak ultimately undid J.C. Penney, the chain has struggled for years to keep customers from defecting and ease its multibillion-dollar debt load.
Its bankruptcy filing in Corpus Christi, Texas, included $900 million to fund the company during its restructuring, including $450 million of fresh capital from existing lenders. About 70% of its first-lien lenders have signed on to the plan.
The company said it owed about $8 billion to more than 100,000 creditors, and the restructuring plan aims to reduce the total by “several billion dollars.” It will explore strategic alternatives, including a third-party asset sale, as a condition of the financing agreement.
Chief Executive Officer
“Implementing this financial restructuring plan through a court-supervised process is the best path to ensure that J.C. Penney will build on its over 100-year history to serve our customers for decades to come,” Soltau said in the company’s statement.
J.C. Penney called its Chapter 11 filing a pre-arranged bankruptcy, using a term of art reserved for cases that have some support from creditors, but not enough to push through the court process as quickly as a fully prepackaged case that has already been voted on by all the debt holders.
The case is J.C. Penney Company Inc., 20-20182, U.S. Bankruptcy Court for the Southern District of Texas (Corpus Christi).
(Updates with terms of support and company comment, starting in the fourth paragraph. A previous version corrected the city where the bankruptcy was filed.)
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