A network of department stores with a century-long history has a chance of avoiding bankruptcy and surviving a pandemic.
As it became known during the bankruptcy hearings of the American chain of department stores J.C. Penney, the company concluded a preliminary deal to sell its business. Buyers will be the largest landlords of department stores, owners of shopping centers Simon Property Group Inc. and Brookfield Property Partners LP, and some other landlords.
Such a step was expected by many market experts, who say it is shopping centers that are most interested in keeping J.C. Penney afloat. Even large malls are experiencing an outflow of retail brands due to the pandemic's consequences. The closure of department stores may be the last thing on their minds.
Thus, the networks' financial situation, which is already quite precarious, has been further aggravated by the pandemic and the possibility of avoiding liquidation. According to preliminary data, the deal's amount, which the parties agreed on, will be $800 million. At the same time, we are talking about the transfer of debt obligations of J.C. Penney to buyers in the amount of about $500 million and investments of $300 million.
Under Chapter 11 of the U.S. Bankruptcy Code, J.C. Penney applied for bankruptcy back in May 2020. And suppose the courts approve the transaction. In that case, the company will avoid closing hundreds of department stores in shopping centers and other locations across the country. It plans to preserve about 600 department stores, while more than 200 locations will still be closed.