Struggling retailer J.C. Penney is in advanced talks with its lenders to reach a bankruptcy agreement.
The department store chain is in discussions for a debtor-in-possession loan between $800 million and $1 billion with its lenders, the Wall Street Journal reported. The retailer entered into a 30-day grace period with Wells Fargo, Bank of America and JPMorgan Chase after missing an April 15 payment.
The new loan would keep J.C. Penney’s operations funded during a bankruptcy proceeding, which is expected to start in the next few weeks. It is possible that discussions with its lenders will drag on, meaning J.C. Penney could enter forbearance.
Brick-and-mortar retailers are among the hardest hit businesses in the global health crisis — though many were struggling long before. In January, weeks before the coronavirus would lead to widespread stay-at-home orders, a credit ratings agency determined J.C. Penney was at risk of default or bankruptcy.
J.C. Penney is not alone in its troubles. Luxury department store Barneys filed for bankruptcy last year after a huge rent increase at its flagship store.
The parent store of Neiman Marcus is also expected to file for bankruptcy protection imminently.
The company is hoping to restructure its $4.7 billion debt load and reopen most of its stores after the crisis subsides. The move could spell disaster for Related and Oxford Properties’ luxury development Hudson Yards, where Neiman Marcus is an anchor tenant. [WSJ] — Georgia Kromrei