J.C. Penney files for Chapter 11 bankruptcy

DALLAS — J.C. Penney made it through two World Wars, the Depression, the Walmart effect, the Great Recession, the ascent of Amazon, the decline of malls and unprecedented self-inflicted wounds as it tried to reinvent the department store.

It took a crippling pandemic to get a company that was founded and flourished first in small-town America and then in its suburban malls into bankruptcy court.

The chain, based in Plano, Texas, and with 846 department stores and 85,000 employees, filed for bankruptcy Friday in U.S. Bankruptcy Court in Corpus Christi.

J.C. Penney said Friday that it’s exploring a sale of the company as part of the reorganization and will be closing stores in phases during the Chapter 11 process. It has secured $900 million in financing from its existing lenders, and that includes $450 million of new money to use during its reorganization. It also has $500 million in cash.

The reorganization will wipe out billions of debt and “provide increased financial flexibility to help navigate through the coronavirus pandemic and better position Penney for the long-term,” the company said.

J.C. Penney made a $17 million interest payment earlier Friday. J.C. Penney said the lenders that hold about 70% of its first-lien debt have agreed to the restructuring.

J.C. Penney turned 118 years old in April while all of its stores were temporarily closed by the coronavirus, making its already difficult turnaround led by CEO Jill Soltau weaker by the day. It reopened a few of its stores this month, but sales declines of 90% during what’s usually a strong spring season isn’t anywhere in anyone’s playbook.

“The coronavirus pandemic has created unprecedented challenges for our families, our loved ones, our communities and our country. As a result, the American retail industry has experienced a profoundly different new reality, requiring J.C. Penney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company,” Ms. Soltau said in a statement.