JC Penney rescue deal approved in bankruptcy court
[NEW YORK] A US judge on Monday approved a deal to rescue JC Penney from bankruptcy proceedings precipitated by the coronavirus pandemic, averting a liquidation that would have put the beleaguered department store chain out of business and jeopardised tens of thousands of jobs.
The US Bankruptcy Court for the Southern District of Texas approved the deal, which will allow the 118-year-old retailer to emerge from bankruptcy before the upcoming holiday season, the company said in a statement. The rescue deal is expected to save approximately 60,000 jobs.
The transaction contains multiple parts. Lenders led by H/2 Capital Partners will forgive US$1 billion in debt in exchange for 160 properties and six distribution centres. Mall operators Simon Property Group and Brookfield Property Partners will acquire the company's slimmed-down retail operations for US$1.75 billion in cash and debt.
The sale approval comes a week after JC Penney's lawyers announced a settlement with nearly all of its creditor groups that locked in support for the sale and marked a turning point in a bankruptcy case that has been marked by inter-lender fighting. However, a group of equity holders - whose investments will be wiped out - remained opposed to the deal.
JC Penney filed for bankruptcy in May with nearly US$5 billion in debt. The company was one of several retailers, including J Crew Group, Neiman Marcus Group and Brooks Brothers that sought Chapter 11 protection amid the coronavirus pandemic.
James Cash Penney launched the company in 1902, opening the first store in Wyoming. JC Penney went public in 1929 and over the next several decades became ubiquitous across the United States. The business began to stumble in recent years as online commerce took a toll on traditional brick-and-mortar retail.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
REUTERS
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Consumer & Healthcare
Marina Bay Sands Q1 profit surges 51.5% to US$597 million on tourism boom
Swiss watch exports plunge as China and Hong Kong demand dries up
Cutting the cord?: Events leading up to Cordlife’s MOH suspension and arrests of its directors, ex-group CEO
Billionaires selling cheap stuff get richer from inflation pain
Amazon to push cashierless shopping tech into more third-party stores, while backing off itself
Japan’s Uniqlo opens Rome store as part of European expansion