The retailer disclosed in a bankruptcy court filing late Thursday that it has made “substantial progress” in a previously reported mediation process to resolve issues in the parties’ sale discussions.
In light of those discussions, Penney’s has asked U.S. Bankruptcy Judge David Jones in Texas, who is overseeing the bankruptcy, for an extension to file a purchase agreement, a Chapter 11 plan and disclosure statement, which were due Friday.
The mediation, which is taking place before Judge Marvin Isgur, is expected to help firm up sales discussions before Oct. 20, when the parties are scheduled to appear for a hearing before Jones, the retailer said.
“J.C. Penney has been and remains laser focused on saving over 60,000 jobs and maximizing the value of these estates through a going concern reorganization,” the retailer wrote in its filing.
“J.C. Penney, Simon and Brookfield, and the majority group of first-lien lenders continue to progress all documentation and are engaged in mediation discussions regarding certain issues, including those relating to working capital, certain closing adjustments and key elements of the master lease agreement,” the retailer wrote.
In the meantime, a minority group of first-lien lenders, who had argued that the deal with the majority first-lien group would undermine the interests of other creditors, has also submitted a competing proposal, the retailer wrote.
At a hearing earlier this month, the minority first-lien lender group emphasized that it supports Simon and Brookfield’s bid for the portion of the deal involving the reorganized J.C. Penney operating company, which would include its retail business.
But the minority group said it objects to the portion of the deal that includes the first-lien majority lenders’ credit bid. That bid includes a separate property company that would be established in the reorganization, or Prop Co., as the attorneys in the case call it.
The minority group had indicated then that it planned to enter a counterbid to the majority first-lien lender group’s component of the deal. J.C. Penney said it is now also considering that proposal.
“That proposal is being considered by the debtors and is likewise the subject of mediation discussions with Judge Isgur,” J.C. Penney said in its filing Thursday. “To that end, Judge Isgur authorized the debtors to hereby report that he believes that substantial progress is being made in the mediation.”
Representatives for J.C. Penney, Simon, Brookfield, the majority first-lien lender group and minority first-lien lender group did not comment Friday.