Here’s Where JCPenney’s Finances Stand As It Inches Toward Business Plan Approval Deadline

Bankrupt JCPenney’s finances appear to be on solid footing as it approaches a Friday court deadline to gain approval for its business plan.

In a July 24 filing with the Securities and Exchange Commission, the Plano, Texas-based retailer said it posted an operating income of $80 million for the month ended July 4, versus a loss of $7 million for the comparable period in 2019. Its net income was $47 million, compared with a loss of $25 million in the prior year period.

The company closed out the month ended July 4 with just over $1.2 billion in cash and cash equivalents on hand, along with just over $2 billion worth of inventory.

In another SEC filing early last week, JCPenney said that it had reached an agreement with its required consenting first-lien lenders on its business plan, under certain conditions. The company said that involved parties had agreed upon “various milestone changes” similar to those set forth in its debtor-in-possession financing agreement but did not specify beyond that.

JCPenney’s business plan has not been disclosed to the public but was shared with creditors, lenders and prospective investors earlier this month, meeting a July 8 deadline. The company was initially required to get approval for the plan by July 14. However, a judge for Texas bankruptcy court granted the retailer’s request for an extension to this Friday, July 31, in order to allow more time to negotiate with lenders and prospective investors.

After struggling for several years amid declining sales, numerous leadership changes and increased digital competition, JCPenney filed for Chapter 11 bankruptcy protection on May 15. In June, it received court approval for a $900 million in debtor-in-possession financing.

Through the restructuring, JCPenney is expected to separate its operating business from its real estate business in a so-called “prop co/op co” structure. Through this split, the “prop co” would be a public real estate investment trust owned by first-lien lenders. In addition, the company expects to close 242 doors, or about 29% of its fleet, by February 2021, leaving it with a trimmed-down fleet of about 600 units. It has begun liquidation sales this summer at more than 150 stores. As it cuts down its store footprint, JCPenney is also laying off about 1,000 workers, it announced in a press release earlier this month.

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