- Prachi Singh |
J. C. Penney Company, Inc. becomes the latest retail giant to enter into Chapter 11 bankruptcy. The company said in a statement that the restructuring support agreement (RSA) with lenders holding approximately 70 percent of JCPenney’s first lien debt is expected to reduce several billion dollars of indebtedness and provide increased financial flexibility to help navigate through the coronavirus pandemic.
“Until this pandemic struck, we had made significant progress rebuilding our company under our Plan for Renewal strategy – and our efforts had already begun to pay off. While we had been working in parallel on options to strengthen our balance sheet and extend our financial runway, the closure of our stores due to the pandemic necessitated a more fulsome review to include the elimination of outstanding debt,” said Jill Soltau, Chief Executive Officer of JCPenney, adding, “Implementing this financial restructuring plan through a court-supervised process is the best path to ensure that JCPenney will build on its over 100-year history to serve our customers for decades to come.”
JCPenney added that it has approximately 500 million dollars in cash on hand as of the Chapter 11 filing date and has received commitments for 900 million dollars in debtor-in-possession (DIP) financing from its existing first lien lenders, which includes 450 million dollars of new money. As part of the plan, JCPenney further said that it will also reduce its store footprint to better align its business with the current operating environment.