J.C. Penney bankruptcy plan approved by judge

A U.S judge has approved a deal to allow J.C. Penney to emerge from bankruptcy, preventing a massive liquidation of the retailer’s stores.

A federal bankruptcy judge in Texas approved the deal on Monday, Reuters reported. As part of the deal, Simon Property Group and Brookfield Asset Management will acquire the struggling retailer for about $1.75 billion in cash and debt.

The deal will allow a group of lenders led by H/2 Capital Partners to forgive $1 billion in debt in exchange for 160 properties and six distribution centers, according to Reuters. The ruling comes a week after J.C. Penney’s lawyers announced it had settled with most of its creditors.

The move could save tens of thousands of jobs and allows the retailer to possibly emerge from bankruptcy before the holiday season.

The process has been fraught from the start, and a group of equity holders is still fighting the deal, since their equity stake will be wiped out. J.C. Penney filed for bankruptcy in May with nearly $5 billion in debt. It has joined a long list of retailers that have filed for bankruptcy.

The deal will also benefit both Simon Property Group and Brookfield Asset Management’s affiliate Brookfield Property Partners. J.C. Penney is an anchor tenant at many of those companies’ malls.

[Reuters] — Keith Larsen