J.C. Penney Co. Inc. has filed for bankruptcy protection.
J.C. Penney Co. Inc. filed for bankruptcy protection on early Friday evening, an expected outcome for the department store chain that has seen steadily declining sales and has struggled to capture an increasingly online customer even before the coronavirus pandemic.
In its Chapter 11 filing in the U.S. Bankruptcy Court for the Southern District in Corpus Christi, Tex., Penney’s said it entered into a restructuring agreement with lenders holding about 70 percent of Penney’s first lien debt to strengthen its financial position. “The coronavirus pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country,” Soltau said. “As a result, the American retail industry has experienced a profoundly different new reality, requiring J.C. Penney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company.
She said the company had seen comparable store sales improvement in six of eight merchandise divisions in the second half of 2019 over the first half. In the immediate days ahead, Penney’s will seek approval from the court to pay non-furloughed associate wages, provide certain benefits to all associates, and to pay vendor partners in the ordinary course for all goods and services provided on or after the Chapter 11 filing date.
As of just earlier this week, the company did not have firm debtor-in-possession financing ready for its filing, highlighting the existential uncertainty that many traditional brick-and-mortar retailers are facing on the other side of the COVID-19 crisis. Retailers that go into Chapter 11 with prenegotiated plans with lenders or investors are likely to have better odds of survival through the process rather than sliding into liquidation.
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