J.C. Penney sale talks stall, pushing retailer to brink
NEW YORK (Reuters) – J.C. Penney Co Inc’s talks with landlords for a rescue from chapter proceedings reached an deadlock, pushing the division retailer to the brink of collapse until it may attain a deal inside days to be taken over by lenders.
FILE PHOTO: A J.C. Penney division retailer signal is pictured in North Riverside, Illinois, U.S., November 17, 2017. REUTERS/Kamil Krzaczynski
Discussions between the Plano, Texas-based retailer and a duo of mall homeowners Simon Property Group Inc and Brookfield Property Companions LP stalled over the weekend, Joshua Sussberg, a J.C. Penney lawyer at Kirkland & Ellis LLP, stated throughout a Monday court docket listening to.
The negotiations have dragged on partially over lease phrases, in response to folks conversant in the matter. Sussberg didn’t element that or another particular sticking factors throughout Monday’s listening to.
Sussberg stated lenders have been nonetheless ready to rescue the 118-year-old firm and greater than 70,000 jobs relying on negotiations over the subsequent 10 days.
A lawyer for the lenders, Andrew Leblanc of Milbank LLP, stated there have been “plenty of hurdles” to reaching such a deal, describing negotiating an settlement on a brief timeframe as a “heavy elevate.” The 2 sides set a Sept. 10 deadline.
Simon didn’t instantly reply to a request for remark whereas Brookfield declined to remark.
J.C. Penney, which filed for chapter in Might after the coronavirus pandemic pressured it to quickly shut the practically 850 shops it operated on the time, is racing to achieve a deal that may carve it into three elements.
One could be an working firm housing its retail enterprise, together with mental property and lots of of shops. Lenders would forgive parts of J.C. Penney’s $5 billion debt load to take management of two actual property funding trusts. One would maintain 160 properties, with the opposite controlling the corporate’s distribution facilities, Sussberg stated.
J.C. Penney had hoped to achieve a take care of Simon and Brookfield to take over the corporate’s retail operations. Sussberg stated negotiations with the duo have been within the “purple zone” earlier this month earlier than hitting roadblocks, together with a proposal from the corporate submitted to the landlords over the weekend that obtained no response.
The event will drive J.C. Penney to shut further shops that at one level may need been saved, Sussberg stated.
U.S. Chapter Choose David Jones had beforehand urged events to put aside what he labeled egos and negotiating postures to get a deal completed.
“I hope everybody realizes how severe I’m about this. I do know the place that is headed,” Jones stated throughout Monday’s listening to. He advised a shareholder that declining to permit J.C. Penney to proceed talks with lenders would end in all the corporate’s shops closing and “the dying of an entity.”
J.C. Penney’s lenders, which embody hedge funds and private-equity corporations financing its chapter case, have now agreed to discover forgiving debt to additionally take management of the corporate’s retail operations along with the 2 actual property funding trusts they envisioned proudly owning.
“Our lenders are now not going to be held hostage,” Sussberg stated. “Time isn’t our pal.”
Buyout agency Sycamore Companions and Saks Fifth Avenue proprietor Hudson’s Bay Co have additionally held discussions with J.C. Penney to take management of its retail enterprise with out reaching a deal, folks conversant in the matter have stated.
J.C. Penney continued talks with these suitors over the weekend, Sussberg stated, although they didn’t attain any settlement. Sycamore and Hudson’s Bay each declined to remark.
Reporting by Mike Spector; Enhancing by Leslie Adler
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