J.C. Penney Files For Bankruptcy

(RTTNews) - J.C. Penney Co. Inc. has filed for Chapter 11 bankruptcy protection citing the impact of unprecedented coronavirus or COVID-19 pandemic on its business.

In a statement, J. C. Penney Company said it has entered into a restructuring support agreement or RSA with lenders holding approximately 70% of JCPenney's first lien debt to reduce outstanding indebtedness and strengthen its financial position.

The company said it has filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, in Corpus Christi, Texas.

As part of the process, JCPenney has secured debtor-in-possession or DIP financing of $900 million from its existing first lien lenders, which includes $450 million of new money. JCPenney has approximately $500 million in cash on hand as of the Chapter 11 filing date.

"Until this pandemic struck, we had made significant progress rebuilding our company," Jill Soltau, the company's chief executive, said in a statement. Soltau continued, "Implementing this financial restructuring plan through a court-supervised process is the best path to ensure that JCPenney will build on its over 100-year history to serve our customers for decades to come".

In bankruptcy, JCPenney said it will reduce its store footprint to better align its business with the current operating environment. The company stated that stores will close in phases throughout the Chapter 11 process. The first phase of closures, including specific store details and timing, will be disclosed in the coming weeks.

J.C. Penney specified that it will open select stores and continue to offer contact-free curbside pickup service at all open stores. JCPenney's eCommerce distribution centers continue to fulfill online orders and customer care centers are answering inquiries as usual.

The company said it remains focused on returning JCPenney to sustainable, profitable growth by reestablishing the fundamentals of retail, re-envisioning its merchandise offerings, and rolling out new innovations.

Neiman Marcus Group Inc., J.Crew Group Inc. and Stage Stores Inc. have all filed for bankruptcy this month.