JC Penney’s store in Laguna Hills, California
Scott Mlyn | CNBC
In the event of JC Penney’s bankruptcy, liquidation is “not in the cards”, according to the department’s lawyer.
Penney is moving forward with the sale, which is expected to close by the fall, said lawyer Joshua Sussberg of Kirkland & Ellis during a court hearing Wednesday afternoon.
“I want to make it clear that we had no discussion about the liquidation,”; Sussberg said of Penney’s restructuring process. “It’s just not on the cards.”
Earlier this week, Sussberg noted a report from the New York Post stating that private company Sycamore plans to bid $ 1.75 billion to buy a 118-year-old chain of department stores and merge it with competitors Belk.
He described the story as “uninformed” and said it was “completely untrue” about Sycamore’s plans to link Penney to Belk.
Sycamore declined to comment.
Three separate offers for real estate and other Penney assets that would allow the retailer to run its own business are being considered, Sussberg said. He declined to name the candidates and said the proposals were confidential.
On May 15, Penney filed for Chapter 11 bankruptcy protection, considered debt, and beat a coronavirus pandemic.
Earlier this month, the company announced it would lay off about 1,000 employees as it moved forward and closed about 150 locations in the United States. When the retailer signed up, he still operated about 860 stores.
Penney said on Wednesday that all stores had reopened in the meantime because they had been temporarily closed due to the Covid-19 crisis.
It said that its non-profile branches, of which 173 have it, continue to perform better than closed-air stores, of which it has 520. Sales in out-of-store stores fell by about 26%, while sales in Penney stores in malls fell by 33% since opening.
According to Sussberg, which allows the company to reduce costs, the department store chain continues to talk to its landlords to agree on better rents.
Forty retailers, including Penney, have filed for bankruptcy according to a 2020 S&P Global Market Intelligence survey. The list is expected to expand.
Many have already fought the Covid-19 crisis that has hit the US economy, forcing businesses to consider themselves irrelevant and to enter shopping malls. The pressure has intensified as the industry is already undergoing seismic changes in consumer behavior and preferred shopping destinations. The dominance of department stores in retail is declining.
According to Sussberg, Penney intends to reach a “mass consensus” on the future strategy by next month.