$1B JCPenney Store Deal Stalls, Sparks Lawsuit

A nearly $1 billion cash deal for more than 100 JCPenney stores devolved into a legal fight after failing to close.

Copper Property CTL Pass Through Trust disclosed last month that a $997 million sale of 119 JCPenney stores to Boston-area private equity firm Onyx Partners missed its Dec. 26 deadline, according to Bisnow. Copper, a trust formed by JCPenney’s lenders after the retailer’s 2020 bankruptcy, said it pulled the portfolio off the market after the failed closing, citing strong interest from other buyers during its initial marketing round.

Onyx, however, insists it’s still in the deal. Founder Anton Melchionda said the firm continues to work toward closing under the existing purchase agreement, telling the outlet the seller didn’t deliver certain tenant-related documents needed to complete the transaction.

Copper declined to comment to the publication, while Onyx did not respond to follow-up questions about the deal’s status.

The breakdown has escalated into a dispute over the buyer’s deposit. Onyx sued Copper in an effort to claw back part of the $5 million it put down, arguing it was ready to close once outstanding issues on the seller’s side were resolved.

Copper plans to distribute $2 million of that deposit to shareholders as part of a dividend on Jan. 9, while the remaining $3 million sits in escrow and is the subject of the lawsuit.

The deal was first announced in July and was initially slated to close by early September. In a recent SEC filing, Copper said it has multiple potential buyers lined up and plans to reassess strategic alternatives early this year.

The portfolio spans 35 states and includes more than 16 million square feet of net-leased space; the average store size is roughly 135,000 square feet. Newmark was marketing the properties.

JCPenney operates about 650 stores nationwide, roughly 160 of which are controlled by Copper following the Chapter 11 process. Those property sales were once expected to fetch just under $1 billion.

— Holden Walter-Warner