J. C. PENNEY AIMING TO AVOID LIQUIDATION IN CHAPTER 11 BANKRUPTCY

by MR Magazine Staff May 18, 2020

With nearly 850 stores and 95,000 employees, JC Penney is the largest retailer yet to be affected negatively by the Coronavirus.

The 118-year-old store chain filed for bankruptcy Friday and is asking a federal judge to authorize the rejection of 20 leases as part of the company’s Chapter 11 bankruptcy. The company said it plans to “accelerate” permanent store closings as part of its bankruptcy but did not provide details on which locations it plans to shutter.

The move sets in motion the process of beginning permanent store closings as the retailer aims to stabilize its finances and avoid outright liquidation.

JC Penney proposed a restructuring plan that would shed billions of dollars in debt and allow the company to emerge from bankruptcy as a financially sustainable company.

But U.S. Bankruptcy Judge David Jones told JC Penney attorneys in a rare Saturday hearing that he has “concerns” that the company is not moving “fast enough.”

“I do think there is a genuine hope that the turnaround efforts will proceed, but it is kind of hard when people are prohibited from coming into your store and you can’t turn the lights on,” Jones said.

“Until this pandemic struck, we had made significant progress rebuilding our company under our ‘Plan for Renewal’ strategy – and our efforts had already begun to pay off,” said Jill Soltau, chief executive officer of JC Penney, in a statement on Friday. “While we had been working in parallel on options to strengthen our balance sheet and extend our financial runway, the closure of our stores due to the pandemic necessitated a more fulsome review to include the elimination of outstanding debt.”

“We are continuing to serve our customers as we move through this process with a commitment to working seamlessly with our vendor partners and landlords,” continued Soltau. “We look forward to emerging from both Chapter 11 and this pandemic as a stronger retailer, continuing to implement our ‘Plan for Renewal,’ and building capabilities focused on satisfying customers’ wants and needs.”