J.C. Penney’s Key Weeks Ahead
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J.C. Penney is gearing up to hustle for approval for its business plan. An attorney for the retailer told a Texas bankruptcy court on Wednesday that it will submit its business plan as anticipated, and that it is discussing with lenders about the possibility of having more time this month to get the plan approved.
So far, the retailer has been hurtling toward a mid-July deadline to get the plan approved. Having it approved by the deadline effectively gives the retailer the greenlight to proceed with its planned restructuring.
Failing that, the alternative could be a potential sale and possible liquidation of inventory, which Joshua Sussberg of Kirkland & Ellis LLP, who represents J.C Penney, told the court is “an outcome that nobody wants, that is not something that we’re working towards.”
The retailer planned to deliver its business plan on Wednesday to lenders, and other stakeholders in the case, including the unsecured creditors committee, as well as attorneys representing an ad hoc equity committee in the case generally meant to address the interests of company shareholders.
“That should be viewed as a complete positive for all parties in this case — vendors, trade creditors, landlords, etc.,” Sussberg said at the hearing. “We’re continuing to work to find a solution and avoid an outcome that nobody wants to see happen.”
J.C. Penney had filed for Chapter 11 in May with a reorganization plan that would separate its real estate assets and its operating asset, which its advisers called a “prop co/op co” structure.
Potential investors in the “op co” portion, who have signed NDAs, will also receive the retailer’s plan, Sussberg told the court.
Penney’s had previously also obtained a rent deferral until July 13, to pay roughly $34 million in lease obligations that the retailer said it would owe for the months of June and July. The company will start paying its deferred rent from Thursday on, Sussberg said.
Separately on Wednesday, Neiman Marcus Group had its own hearing in its ongoing bankruptcy also before the same court. The retailer also appeared before U.S. Bankruptcy Judge David Jones alongside one of its jewelry consignors, Tamara Comolli Fine Jewelry Ltd., Inc., which sought to continue to re-assort its jewelry with Neiman Marcus as it usually does in the ordinary course of business.
The request appeared to be something of a formality, or clarification, in order to avoid running afoul of the bankruptcy code, which places restrictions on actions related to anything that can be considered the debtor company’s assets.
In this case, the judge indicated he was inclined to allow the jewelry company to proceed with business as usual.
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