JCPenney is on track to begin operating under new ownership and outside of Chapter 11 by late November after a US bankruptcy court approved its sale agreement with Brookfield Asset Management, Simon Property Group and a majority of its lenders.
The department store retailer, which filed for Chapter 11 bankruptcy protection in May, inked an asset purchase agreement (APA) last month through which the firms will acquire substantially all of JCPenney’s retail and operating assets (OpCo) through a combination of cash and new term loan debt.
“Our goal from the beginning of this process has been to ensure JCPenney will continue to serve customers for decades to come and this court approval accomplishes that objective,” said Jill Soltau, chief executive officer of JCPenney.
JCPenney began bankruptcy talks with lenders in April after its fourth-quarter net income slid to US$27m from $75m a year earlier. And in July it outlined plans to axe about 1,000 jobs and close 152 stores.
The Covid-19 pandemic has weighed heavily on the finances of many apparel retailers and has also seen J.Crew Group, US luxury department store retailer Neiman Marcus, and most recently off-price fashion retailer Stein Mart file for Chapter 11.
The OpCo transaction remains subject to additional closing conditions and is expected to close in late November.