PLANO, Texas – JCPenney Co., the century-old retailer that has become the ubiquitous presence in malls across America, filed for bankruptcy protection Friday afternoon, becoming the most well-known business to fall victim of the pandemic to date.
As one of the nation’s largest apparel and home retailers, J.C. Penney operates about 850 stores in the U.S. and employs 85,000.
The retailer filed for Chapter 11 bankruptcy protection in the Southern District of Texas as it looks to shed billions in debt from its books. The company said that it had entered into a restructuring support agreement with lenders holding approximately 70% of JCPenney’s first lien debt.
As part of that agreement, JCPenney will explore a sale of the company and will close some of its stores. Those closures will come in phases and the locations to be affected will be disclosed in coming weeks. JCPenney has three stores in Delaware – one each at the Christiana Mall, Dover Mall and the Prices Corner Shopping Center near Elsmere.
All locations were closed for weeks during the coronavirus pandemic, and some brick-and-mortar locations are beginning to reopen as states allow commerce again.
The company reported having about $500 million in cash on hand as of the Chapter 11 filing date and has received commitments for $900 million in debtor-in-possession financing from its existing first lien lenders, including $450 million in new money.
In a statement announcing the bankruptcy, JCPenney CEO Jill Soltau said that the COVID-19 pandemic had forced the company to “make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company.”
“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. 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,” she added.
Kirkland & Ellis LLP is serving as legal advisor, Lazard is serving as financial advisor, and AlixPartners LLP is serving as restructuring advisor to the company through the bankruptcy.
By Jacob Owens
