J. C. Penney Company Inc. is officially out of bankruptcy and is headed into the thick of the holiday shopping season, which is pressured amid a resurgence in the COVID-19 outbreak.
The department store, which filed for Chapter 11 protection in mid-May, announced today that it has completed its previously announced sale to Simon Property Group and Brookfield Asset Management Inc. as well as its debtor-in-possession and first lien lenders.
As part of the deal, JCPenney has been split into two parts: one being the operating company, controlled by the mall giants, and the other is the property holding company owned by lenders.
“Today is an exciting day for our company, as we have accomplished our goal of putting JCPenney on a secure path for the future as a private company so that we can continue to serve our loyal customers,” CEO Jill Soltau said in a statement. “With this closing, our operating company has exited Chapter 11 and is continuing under new ownership and the JCPenney banner.”
In its bankruptcy filing, JCPenney revealed that it would permanently shut down 242 outposts, and it moved forward with the closures of 144 locations two months ago. The agreement with Simon and Brookfield effectively prevented more stores from going dark, with the landlords agreeing to take on the retailer’s business to preserve anchor spots and avoid an exodus of other tenants at their shopping centers.
“We have always been firm believers in JCPenney and are very pleased to help preserve this iconic institution and save tens of thousands of jobs,” Simon Property Group chairman, president and CEO David Simon said. “JCPenney is now poised for a future focused on innovation and consumers while continuing to navigate through the pandemic.”
Since taking the helm two years ago, Soltau shuttered several underperforming stores and hired new talent in hopes of reviving the struggling business. JCPenney also hired debt restructuring advisers in mid-July as part of its turnaround plan. It experimented with new strategies aimed at returning the company to its glory days — including dipping its toes into the outdoor market, partnering with consignment giants and launching curbside pickup. However, it continued to struggle with plummeting sales, rising digital competition and, more recently, challenges stemming from the coronavirus pandemic.
With the completion of the sale, JCPenney now has access to roughly $1.5 billion in new financing — offering the company the financial flexibility it needs to see if its restructuring plan can restore profitability in the business amid retail’s new normal.
“This milestone would not be possible without the commitment and hard work of our associates and the support of our vendor partners,” Soltau added. “Throughout the 2020 holiday season and beyond, we remain focused on implementing our plan for renewal.”