J.C. Penney is keeping its doors open, and its retail business is officially leaving its nearly seven-month trip through bankruptcy court.
Since the Texas bankruptcy court’s approval last month of the sale of its retail business to landlords Simon Property Group and Brookfield Asset Management Inc., the deal has officially closed, the retailer said Monday.
The sale transaction, which took months-long negotiations between advisers for J.C. Penney, landlords and lenders, as well as other stakeholders who settled their objections in the case, is a complex affair. Other aspects of the company’s bankruptcy, including the portion of its real estate business that its lenders will take over, are still working their way through the bankruptcy court and are expected to exit the process next year, according to a statement by the company.
“Today is an exciting day for our company, as we have accomplished our goal of putting J.C. Penney on a secure path for the future as a private company so that we can continue to serve our loyal customers,” said J.C. Penney chief executive officer Jill Soltau. “With this closing, our operating company has exited Chapter 11 and is continuing under new ownership and the J.C. Penney banner.”
As reported in recent months, J.C. Penney’s sale transaction contemplated a division of the company’s retail and operating assets, including its name and intellectual property, from its real estate business. Under the deal, Simon and Brookfield would run the retail business, while the retailer’s first-lien secured lenders, many of whom also supplied its debtor-in-possession financing, would take over the property business that includes 160 real estate locations as well as distribution centers.
That property business, or PropCos, is still undergoing the restructuring process in court, since bankruptcy Judge David Jones approved the company’s Chapter 11 plan last month.
The PropCos and the OpCo will work in tandem through master lease agreements, which were hammered out also over the course of negotiations and mediations before another bankruptcy judge in the same court. The sale of the operating company, or OpCo., leaves the retailer with $1.5 billion in financing, the parties said Monday.
“We have always been firm believers in J.C. Penney, and are very pleased to help preserve this iconic institution and save tens of thousands of jobs,” said David Simon, chairman and ceo of Simon Property.
“J.C. Penney is now poised for a future focused on innovation and consumers, while continuing to navigate through the pandemic,” he said in the statement. “We are excited about J.C. Penney’s future growth and look forward to collaborating with the J.C. Penney team to serve its customers and communities.”