NEW YORK: J.C. Penney Co. Inc. has reached a tentative deal with landlords and lenders valued at $1.75 billion to rescue the beleaguered department store chain from bankruptcy proceedings.
This averts a liquidation that would have threatened roughly 70,000 jobs and represented one of the most significant business collapses following the coronavirus pandemic, a company lawyer said.
Mall owners Simon Property Group Inc and Brookfield Property Partners LP have teamed up to acquire J.C. Penney’s retail operations and are putting the finishing touches on an agreement, Joshua Sussberg, a Kirkland & Ellis LLP lawyer representing the company, said during a brief court hearing Wednesday.
The landlords are poised to put $300 million toward the rescue and have agreed to a non-binding letter of intent with J.C. Penney, he said. The operating company they are acquiring would assume $500 million of debt.
Lightning speed
J.C. Penney plans to move at “lightning speed” to seek approval of the deal from a bankruptcy judge in early October, Sussberg said.
The restructured retailer is expected to operate about 650 stores. Hedge funds and private-equity firms financing J.C. Penney’s bankruptcy, meanwhile, would take ownership of 161 of those stores and separate distribution centres after forgiving portions of the company’s $5 billion debt load, Sussberg said.
These lenders, led by H/2 Capital Partners, would own those assets in two separate real estate investment