JC Penney ‘plans to file for bankruptcy in today’


JC Penney (file image) could file for bankruptcy within the next 24 hours, sources have claimed. Sources familiar with the matter said the company

JC Penney could file for bankruptcy as early as Friday morning, sources familiar with the matter have claimed. 

The insiders told CNBC that the company’s advisors are currently working on a bankruptcy filing. 

However, they noted that final negotiations between the department store chain and its lenders could pour into the weekend, delaying the filing. 

JC Penney, which has 846 stores in the US, aims to reorganize and emerge from bankruptcy protection. It plans to permanently shutter between 180 to 200 stores, a figure that could fluctuate depending on negotiations with creditors, the sources said

If the company shuts down those stores, it will become the latest major US retailer to succumb to fallout from the coronavirus outbreak.

JC Penney (file image) could file for bankruptcy within the next 24 hours, sources have claimed. Sources familiar with the matter said the company's advisors are currently working on a bankruptcy filing that could come early Friday morning

JC Penney (file image) could file for bankruptcy within the next 24 hours, sources have claimed. Sources familiar with the matter said the company’s advisors are currently working on a bankruptcy filing that could come early Friday morning

As of February, JC Penney employed about 90,000 full-time and part-time workers. 

A bankruptcy filing would cap a long decline for the 118-year-old department store chain, which struggled with a nearly $4billion debt load and competition from e-commerce firms even before the pandemic’s onset.

The Plano, Texas-based company is in discussions with creditors for a so-called debtor-in-possession loan to bolster its finances while it navigates bankruptcy proceedings, sources told Reuters last week. 

The loan could total between $400million and $500million, some of the sources said. JC Penney declined to comment when approached by Reuters. 

Retailers are bearing a significant brunt of the economic fallout from the pandemic as sales all but evaporate. 

Just last week, luxury department store chain Neiman Marcus and clothing retailer J. Crew filed for bankruptcy protection.

In April, the US economy lost 20.5 million jobs, the steepest plunge since the Great Depression, according to the Labor Department.

JC Penney skipped a $17million debt payment last week and only has five days to make good on it before defaulting. A 30-day grace period on a $12million payment the company skipped April 15 ends Friday.

A bankruptcy filing would cap a long decline for the 118-year-old department store chain, which struggled with a nearly $4billion debt load and competition from e-commerce firms even before the pandemic's onset. The remains of a JC Penney store is seen in North Carolina

A bankruptcy filing would cap a long decline for the 118-year-old department store chain, which struggled with a nearly $4billion debt load and competition from e-commerce firms even before the pandemic’s onset. The remains of a JC Penney store is seen in North Carolina

Under one plan being discussed, JC Penney would emerge from bankruptcy as two separate companies, the sources said. 

One would own some of the company’s real estate and serve as a landlord to the other entity operating the retailer’s business, they said. 

Creditors, many of them Wall Street hedge funds, would control the businesses in exchange for forgiving debt, they said.

JC Penney Chief Executive Jill Soltau told customers last week that stores have started to gradually reopen with precautions

JC Penney Chief Executive Jill Soltau told customers last week that stores have started to gradually reopen with precautions

JC Penney’s online sales have not been enough to compensate for the significant losses it has incurred while keeping stores closed across the US in response to lockdowns aimed at curbing the spread of the coronavirus.

While the company has enough cash to survive in the coming months, it faces a $105million debt payment due in June and about $300million of annual interest expenses. More than $2billion of debt comes due in 2023.

JC Penney Chief Executive Jill Soltau told customers last week that stores have started to gradually reopen with precautions such as Plexiglass shields at registers and limited crowds.

The e-commerce revolution that took hold in the 21st century eroded JC Penney’s business much as it did other traditional retailers. The company now also faces fierce competition from discount chains including Marshalls and TJ Maxx chains.

However, JC Penney had recently made some strides in its turnaround attempt, meeting or exceeding guidance on financial objectives for 2019 and improving sales at some stores.

But the coronavirus pandemic has sent the company into a tailspin.

Neiman Marcus filed for bankruptcy protection last Thursday in a Houston federal court. The closed Neiman Marcus headquarters in Dallas, Texas, is pictured on April 27

Neiman Marcus filed for bankruptcy protection last Thursday in a Houston federal court. The closed Neiman Marcus headquarters in Dallas, Texas, is pictured on April 27

Operations at J.Crew will continue throughout a restructuring and clothing will still be available to purchase online. The coronavirus outbreak forced the company to temporarily close its nearly 500 stores across the US

Operations at J.Crew will continue throughout a restructuring and clothing will still be available to purchase online. The coronavirus outbreak forced the company to temporarily close its nearly 500 stores across the US 

Last Thursday, Neiman Marcus filed for bankruptcy protection in a Houston federal court. 

It reached an agreement with creditors for $675million of debtor-in-possession financing to aid operations while it attempts to reorganize.

CEO Geoffroy van Raemdonck said they will continue to operate via digital platforms and via relationships with brand partners as well as at select physical locations as states reopen after lockdowns. 

Neiman Marcus also said it would cede control to creditors under the agreement that will eliminate $4billion of debt. Its debt currently totals about $5billion. 

Meanwhile, retailer J.Crew filed for bankruptcy protection on May 4 with a plan to avoid liquidation and reorganize its debts thanks to an agreement with its creditors. 

The agreement to eliminate its roughly $1.65billion of debt will come in exchange for ceding ownership to creditors. 

Operations at J.Crew will continue throughout a restructuring and clothing will still be available to purchase online. 

In addition to cancelling debt, J. Crew plans to close stores, though the final number it plans to shutter has not yet been determined, a person familiar with the matter said. 

The coronavirus outbreak forced the company to temporarily close its nearly 500 J. Crew and Madewell stores across the US.


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