J. C. Penney Company Inc. is moving forward with brick-and-mortar closures as it seeks to exit bankruptcy.
In a Thursday filing with the United States Bankruptcy Court for the Southern District of Texas, the beleaguered chain revealed that it is set to shutter 144 stores across the country. The locations are part of JCPenney’s plan to shut down 242 locations, announced five months ago in its Chapter 11 filing.
The move comes a month after the department store said that it had reached an agreement to sell its business to Simon Property Group and Brookfield Property Partners. As part of the deal, the mall giants plan to acquire “substantially all of JCPenney’s retail and operating assets” for $1.75 billion, with a combination of cash and debt.
In addition to the sale of its operations, JCPenney is forming a separate real estate investment trust and a property holding company, comprised of 161 of its real estate assets and all of its owned distribution centers. (On its website, the company said it operates a supply chain network of 11 facilities, including distribution centers, regional warehouses, online fulfillment centers and furniture distribution centers.) According to JCPenney attorney Joshua Sussberg of Kirkland & Ellis, the deal is expected to keep intact more than 600 stores and 70,000 jobs.
However, bankruptcy judge David Jones has yet to sign off on the agreement, which was contested just this week when debt holders led by Aurelius Capital Management announced their intention to bid for six of the retailer’s distribution centers and the aforementioned 161 stores. The judge gave the investment firm time to submit its plan before the end of next week, which is when the Simon-Brookfield deal is expected to receive approval.
After struggling for several years amid declining sales, numerous leadership changes and increased digital competition, JCPenney filed for Chapter 11 protection on May 15. It obtained $900 million in debtor-in-possession financing to aid operations. In late August, a court filing showed that its net loss for the month ended July 20 was $342.1 million, while revenues were $564.3 million, compared with an income of $46.2 million and sales of $621.7 million for June.
Correction: This story has been updated to show that the 140-plus closures were part of the 242 stores set to close as announced in JCPenney’s bankruptcy filing. The original story suggested that the 140-plus closures were in addition to the original 242 closures.
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