J.C. PENNEY AVERTS LIQUIDATION AS LESSORS, LENDERS OK RESCUE DEAL

J.C. Penney Co., Inc. has reached a tentative deal with landlords and lenders valued at $1.75 billion to rescue the beleaguered department store chain from bankruptcy proceedings, averting a liquidation that would have threatened roughly 70,000 jobs and represented one of the most significant business collapses following the coronavirus pandemic, a company lawyer said.

Mall owners Simon Property Group Inc. and Brookfield Property Partners LP have teamed up to acquire J.C. Penney’s retail operations and are putting the finishing touches on an agreement, Joshua Sussberg, a Kirkland & Ellis LLP lawyer representing the company, said during a brief court hearing Wednesday, confirming an earlier Reuters report.

The deal would carve J.C. Penney into three pieces. In addition to the retail operations the landlords are purchasing, lenders would take control of two other entities housing some J.C. Penney stores and the retailer’s distribution centers, Jessica DiNapoli and Mike Spector wrote for Reuters.

The landlords are poised to put $300 million toward the rescue and have agreed to a nonbinding letter of intent with J.C. Penney, he said. The operating company they are acquiring would assume $500 million of debt. J.C. Penney plans to move at “lightning speed” to seek approval of the deal from a bankruptcy judge in early October, Sussberg said. “We are in a position to move this into the endzone,” he told U.S. Bankruptcy Judge David Jones, noting that previous talks were in the “red zone” before faltering and then gaining renewed traction.

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