JC Penney Co is preparing to file for bankruptcy protection as soon as next week, with plans to permanently close about a quarter of its roughly 850 stores, according to people familiar with the matter. This would make it the latest major US retailer to succumb to fallout from the coronavirus outbreak.
A bankruptcy filing would cap a long decline for the iconic 118-year-old department store chain which has struggled with a nearly $4 billion (€3.7bn) debt load and competition from e-commerce firms and discount brick-and-mortar retailers even before the pandemic’s onset.
The Texas-based company, which employs nearly 85,000 people, is in discussions with creditors for a so-called debtor-in-possession loan to bolster its finances while it navigates bankruptcy proceedings, the sources said. The loan could total between $400 million and $500 million, some of the sources said.
The timing of a bankruptcy filing could slip depending on how much time it gets from creditors, the sources said.
JC Penney skipped a $17 million debt payment Thursday, and only has five days to make good on it before defaulting. A 30-day grace period on a $12 million payment the company skipped April 15th ends next Friday.
JC Penney has not made a final decision on how to address its strained finances, and is also considering alternatives that include negotiating a deal with creditors outside of bankruptcy court or obtaining additional financing, the sources said.
The sources spoke on condition of anonymity to discuss confidential deliberations. JC Penney declined to comment. – Reuters
