US-based retailer JCPenney filed for Chapter 11 bankruptcy protection.
The department store chain group entered into a restructuring support agreement with lenders holding some 70% of JCPenney’s first lien debt to reduce its outstanding indebtedness and strengthen its financial position.
The plan is expected to reduce several billion dollars of indebtedness, provide support to help navigate through the COVID-19 pandemic and better position the company for the long-term.
JCPenney has some $500m in cash on hand as of the Chapter 11 filing date. The retailer has received commitments for $900m in debtor-in-possession financing from its existing first lien lenders, which includes $450m of new money.
The company expects the financing, combined with cash generated by ongoing operations, to be sufficient enough to meet JCPenney’s operational and restructuring needs. The retailer will also explore a third-party sale process.
As part of the financial restructuring, the retailer will close stores throughout the Chapter 11 process. The first phase of closures including specific store details and timing, will be disclosed in the coming weeks.
The retailer was forced to temporarily close stores on March 18 due to the COVID-19 pandemic. On March 31, the company announced that it would furlough the majority of its staff.