J.C. Penney explores bankruptcy after the pandemic forced it to temporarily shut its 850 department stores, upending its turnaround plans
) is exploring filing for bankruptcy protection after the coronavirus pandemic forced the U.S. retailer to temporarily shut its 850 department stores, upending its turnaround plans, according to people familiar with the matter.
The Plano, Texas-based company has access to enough cash to survive in the months ahead, even as revenue dries up because of the store closures, the sources said. Still, the company is contemplating a bankruptcy filing as one way to rework its unsustainable finances and save money on looming debt payments, which include significant annual interest expenses, the sources added.
J.C. Penney has not made any final decisions on how to address its strained finances, the sources said. The retailer is also considering asking creditors for breathing room through transactions that would rework debt outside of bankruptcy court proceedings, the sources added. There is also a possibility that J.C. Penney will be able to secure rescue financing, one of the sources said.J.C.
J.C. Penney attempted unsuccessfully to persuade creditors earlier this year to restructure and push out due dates on portions of its nearly $4 billion of long-term debt without the need for bankruptcy proceedings. It hoped to buy time for Chief Executive Jill Soltau’s turnaround plan to bear fruit, as it faced fierce competition from e-commerce firms as well as discount retailers such as the TJX Cos Inc’s Marshalls and T.J. Maxx chains.
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