J. C. Penney has announced that it has filed for Chapter 11 bankruptcy.
The filing comes as part of an RSA that contemplates agreed-upon terms for a pre-arranged financial restructuring plan that is expected to reduce several billion dollars of debted, provide increased financial flexibility to help navigate through the COVID-19 pandemic and better position JCPenney for the long-term.
“The COVID-19 pandemic has created unprecedented challenges for our families, our loved ones, our communities and our country,” says Jill Soltau, chief executive officer, JCPenney. “As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company. 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. 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. We believe the RSA and the widespread support we have received from our asset-based lenders and first lien lenders will allow us to pursue a financial restructuring on an expedited timeframe. We are also encouraged by the level of support we have received from our vendor partners, landlords, and other stakeholders, whose confidence in our business and our people is expected to contribute to a successful reorganization.”
Even with the COVID-19 pandemic and the Chapter 11 filing, Soltau has hope for the future of the company as a whole and hopes to come out of the pandemic a stronger retailer.
“We have a newly refreshed, highly experienced team of retail executives who remain focused on rebuilding our business and restoring financial strength to JCPenney,” Soltau continued. “This team has continued to innovate even during these challenging times, implementing substantial improvements to our flagship eCommerce platform to increase efficiency and ensure our loyal customers continue to have access to the products they need through elevated shopping experiences. I would also like to thank all of our outstanding associates for their continued dedication to our company and their passion for meeting and exceeding our customers’ expectations. We are continuing to serve our customers as we move through this process with a commitment to working seamlessly with our vendor partners and landlords. We look forward to emerging from both Chapter 11 and this pandemic as a stronger retailer, continuing to implement our Plan for Renewal, and building capabilities focused on satisfying customers’ wants and needs.”
During May, three other well-known retailers have already filed for Chapter 11 including J.Crew on May 4, Neiman Marcus on May 7 and Stage Stores on May 10.