(Bloomberg)—J.C. Penney Co.’s lenders plan to take ownership of the retailer after talks with potential outside buyers have so far failed, an attorney for the company said in a bankruptcy court hearing Monday.
“We’ve hit a stalemate,” the attorney, Joshua Sussberg of Kirkland & Ellis LLP, said in the hearing. “Our lenders will no longer be held hostage” by outside bidders, he said.
The company will continue exploring outside bids, Sussberg said, but the retailer’s advisers will now work with lenders to negotiate a debt-for-equity swap in the next 10 days, he said.
J.C. Penney filed for bankruptcy May 15, part of a wave of already-struggling merchants undone as the novel coronavirus shut stores and clipped spending. It announced a plan to spin off some of its stores into a real estate investment trust that lenders would control and sell the retail business to the highest bidder.
Advisers to the company boasted throughout the process of robust bidder interest, and parties including Sycamore Partners and Saks Fifth Avenue owner Hudson’s Bay Co. have weighed buying the chain.
The company still hopes to preserve jobs in the new deal with lenders, Sussberg said. “We are going to do everything humanly possible to ensure that J.C. Penney will be around for the foreseeable future,” he said.
The case is J.C. Penney Company Inc., 20-20182, U.S. Bankruptcy Court for the Southern District of Texas (Corpus Christi).
To view the docket on Bloomberg Law, click here.
--With assistance from Lauren Coleman-Lochner.
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