(CBS NEWS) — J.C. Penney believes it will emerge from Chapter 11 bankruptcy proceedings before Christmas, under a proposed ownership agreement that would save tens of thousands of jobs.
The beleaguered, century-old retailer said Wednesday it has filed a draft purchase agreement with the nation’s two biggest mall owners. Substantially all of J.C. Penney’s retail and operating assets will be acquired by Brookfield Asset Management and Simon Property Group through a combination of cash and new loan debt.
Details of the $800,000 million deal that will save roughly 70,000 jobs and avert a total liquidation first emerged last month during a bankruptcy hearing. During the hearing, a lawyer representing J.C. Penney said Simon and Brookfield will spend $300 million for the acquisition then take on another $500 million in debt on behalf of the retailer.
The deal goes before a bankruptcy judge in Texas on Monday.
If the J.C. Penney deal is approved, the company would be the latest brand to fall under Simon Property ownership. Earlier this year, Simon Property bought men’s clothier Brooks Brothers, fast fashion retailer Forever 21 and denim store Lucky Brand. Simon Property owns most of the malls where these stores have been anchored.
There are still several J.C. Penney locations in the Pittsburgh area, including Ross Park Mall which is a Simon Mall. There are also locations at Monroeville Mall, the Mall at Robinson and Beaver Valley Mall.
J.C. Penney — which even before the coronavirus pandemic struggled to compete with Amazon, Target and Walmart — became one of the largest retailers to file for Chapter 11 bankruptcy this year amid a wave of store closures forced by the spread of COVID-19 infections. About $4 billion in debt has weighed down J.C. Penney and the company has closed numerous stores in recent years in order to cut costs.
In its most recent quarter, J.C. Penney’s sales fell nearly 8%, to $3.4 billion, from the same period a year ago. Income was $27 million, down from $75 million a year ago. The company missed two debt payments, one in April and one in May, which many analysts saw as a harbinger of bankruptcy.
CEO Jill Soltau said in May that bankruptcy “is the best path to ensure that JCPenney will build on its over 100-year history to serve our customers for decades to come.” The Texas-based retailer will shed nearly a third of its stores in the next two years as it restructures, leaving just 600 locations open.
More than two dozen retailers have filed for bankruptcy since the pandemic including restaurants, gyms and other businesses. Neiman Marcus, J. Crew, Hertz, Ruby Tuesday and Gold’s Gym all blamed their financial woes on the pandemic. Lord & Taylor ended a nearly 200-year-old legacy after filing for bankruptcy in August.
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