J.C. Penney’s future now is in limbo
A plan to sell bankrupt J.C. Penney Co.’s retail operations to its two biggest landlords stalled this week, raising the prospect that creditors will carry the burden of millions of dollars in extra costs as the retailer prepares for the crucial holiday season.
Talks between Penney’s lenders and the would-be buyers, mall owners Simon Property Group Inc. and Brookfield Property Partners LP, broke down in recent days, according to people with knowledge of the negotiations. The landlords missed several deal deadlines as communication between the parties lapsed, the people added. The two sides may now turn to mediation.
The standstill comes ahead of Penney’s most crucial quarter; retailers typically make much of their annual revenue in the period between Thanksgiving and the new year.
At stake in coming weeks is financial responsibility for tens of millions of dollars of orders, including merchandise the company must have in stock for holiday shopping.
Penney’s original sale plan called for the deal to close around Oct. 3, according to a regulatory filing Wednesday. A further delay in closing the deal threatens to put the holiday purchasing burden onto the group of creditors running Penney in its bankruptcy. If the sale closes after orders are made, the landlords would still reap the rewards of the holiday revenue without shouldering the inventory risk.
The department store chain filed for bankruptcy in May.
The deal with Simon and Brookfield, announced last month, would preserve 70,000 jobs and keep the chain alive but has sparked controversy from creditors.