J.C. Penney in talks with lenders for bankruptcy funding, according to report
J.C. Penney is inching closing to filing for bankruptcy.
According to a report by the Wall Street Journal reported, the ailing retailer is in talks with existing lenders Wells Fargo & Co., Bank of America Corp. and JPMorgan Chase & Co. and is seeking a debtor-in-possession loan package of $800 million to $1 billion. The loan would keep the retailer’s operations running during the bankruptcy process. Other lenders also could participate in the syndicated loan, according to the Journal.
Penney recently skipped a roughly $12 million interest payment on senior notes that due on April 15. In a filing with the Securities and Exchange Commission, the retailer said it is entering into a 30-day grace period “in order to evaluate certain strategic alternatives, none of which have been implemented at this time."
Analyst Neil Saunders, managing director of GlobalData Retail, commented that, under the protection of Chapter 11, Penney would be able to restructure and reassess its options.
“It would give Jill Soltau [Penney CEO] more room for maneuver and allow her to take some of the tough decisions, such as store closures, that are needed,” he said.
Saunders noted that even before the COVID-19 pandemic, Penney had a very narrow path to recovery.
“That path is now blocked,” he added. “It needs to explore other options and chart a new way forward, or perhaps decide that the journey is finally over.” (Click here for more commentary.)