J.C. Penney Files for Bankruptcy in the Wake of Coronavirus Pandemic
The company said it filed for Chapter 11 bankruptcy protection from its creditors as part of a restructuring plan that would eliminate "several billion dollars of indebtedness"
The department store chain announced on Friday that it has filed for Chapter 11 bankruptcy protection from its creditors as part of a restructuring plan that would eliminate "several billion dollars of indebtedness" and "provide increased financial flexibility to help navigate" the health crisis.
The company also said that it plans to close stores, but did not disclose any specific locations or timing.
“The Coronavirus (COVID-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country," Jill Soltau, chief executive officer of J.C. Penney, said in a statement. "As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company."
J.C. Penney had been struggling with declining sales for years after hedge fund manager Bill Ackman, who was ousted in 2013, attempted to rebrand the retailer into a collections of boutiques, according to the New York Times.
Soltau said the company had been making "significant progress" in restoring financial strength before the coronavirus outbreak, but the temporary closure of J.C. Penney stores nationwide "necessitated a more fulsome review to include the elimination of outstanding debt."
“Implementing this financial restructuring plan through a court-supervised process is the best path to ensure that JCPenney will build on its over 100-year history to serve our customers for decades to come," Soltau said.
J.C. Penney extended its storewide closures in late March and furloughed the majority of its hourly retail associates in early April.
The company has since also furloughed employees in its Salt Lake City office, as well as salaried store associates.
“These are difficult days all across the country and the globe. At JCPenney, we are making tough, prudent decisions to protect both the safety of our associates and the future of our Company,” Soltau said in a statement in March. “We remain optimistic about JCPenney’s ability to weather this pandemic. We also believe these short-term solutions will have a long-term benefit for our associates, customers, and key stakeholders as we look forward to the day that we reopen our doors.”
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