New details are emerging in the JCPenney bankruptcy.
The struggling retailer filed for Chapter 11 protection in federal bankruptcy court for the Southern District of Texas on Friday evening. According to the filing, JCPenney had $500 million in cash at hand and received debtor-in-possession financing commitments of $900 million. The company listed its assets in the range of $1 billion to $10 billion — the same as its estimated liabilities.
According to court documents obtained by FN, JCPenney has over $1 billion in unsecured senior notes, for which Wilmington Trust serves as trustee. After that, the retailer’s largest creditor is Nike, with an owed balance of more than $32 million. JCPenney owes over $7 million to Adidas, about $5.7 million to Van Heusen Sportswear and nearly $4 million to Footwear Unlimited, parent to Baretraps and Andrew Geller. Additionally, New Balance has an unsecured claim of roughly $3.2 million.
For several years, JCPenney has struggled with declining sales, numerous leadership changes and increased digital competition. Since taking the helm in October 2018, CEO Jill Soltau has shut down under-performing stores and brought on new talent to revive the business. The Plano, Texas-based company also hired debt restructuring advisers in mid-July as part of its turnaround plan, as well as experimented with new strategies including tapping into the outdoor and consignment markets and launching a curbside pickup program.
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Nonetheless, investors had largely lost faith in the retailer, pushing its stock below $1 and putting it at risk of being delisted from the New York Stock Exchange. Then came the coronavirus pandemic: Two weeks after shuttering its 850 stores in mid-March due to government-mandated closures, JCPenney announced that it would furlough scores of workers and take additional actions to maintain its financial flexibility. Two months ago, JCPenney tapped roughly $1.25 billion from its $2.35 billion revolving credit line. Its debt load sits at about $4 billion.
According to court documents, JCPenney is planning to split into two public companies as it reemerges from bankruptcy — separating its retail business from a real estate investment trust — in order to shore up more liquidity. At the time of its filing, the retailer operated about 850 stores nationwide, but it plans to shed an unspecified number of units permanently as part of its restructuring. (It will announce the locations slated for closure in the weeks to come.) As of last week, JCPenney had reopened 41 stores post-pandemic and is offering curbside pickup at an additional seven units. However, the bulk of its fleet remains shut.