J.C. Penney Co. confirmed in a news release that it had filed Chapter 11 paperwork in an effort to reduce the company’s debt by “several billion dollars.” The retail giant was also expected to announce a number of store closures in the coming weeks.
The company has entered into a restructuring support agreement with the lenders who hold more than two-thirds of the company’s first lien debt, the company said.
“We look forward to emerging from both Chapter 11 and this pandemic as a stronger retailer, continuing to implement our Plan for Renewal, and building capabilities focused on satisfying customers’ wants and needs,” Jill Soltau, the company’s chief executive officer, said in the statement.
The company said it had about $500 million in cash on hand as of the filing. It had also received commitments for $900 million in debtor-in-possession financing from its first lien lendors—about half of which was new money, according to the company.
The financing was expected to be enough to meet the company’s operational needs, J.C. Penney said.
The company said it would seek permission from the court to pay non-furloughed employees, provide benefits and pay vendors.
On March 31, the company announced plans to furlough more than half of its hourly workforce as part of cost-saving moves due to the loss in revenue related to the coronavirus. Furloughs also included employees at the company's corporate headquarters in Plano.
The company said it would also be reducing the number of stores it operates throughout the country. J.C. Penney has about 850 stores in the United States and Puerto Rico along with its e-commerce site, jcp.com.
“Stores will close in phases throughout the Chapter 11 process – and the first phase of closures, including specific store details and timing, will be disclosed in the coming weeks,” the company said.