(Reuters) – A U.S. judge on Monday approved a deal to save JC Penney Co Inc from bankruptcy proceedings precipitated by the coronavirus pandemic, averting a liquidation that would have bankrupted the besieged department store chain and put at risk tens of thousands of jobs.
The U.S. Southern District of Texas bankruptcy court has approved the deal, which will allow the 118-year-old retailer to emerge from Chapter 13 bankruptcy before the next vacation, the company said in a statement. The bailout deal is expected to save around 60,000 jobs.
The transaction contains several parts. Lenders led by H / 2 Capital Partners will write off $ 1 billion in debt in exchange for 160 properties and six distribution centers. Shopping center operators Simon Property Group and Brookfield Property Partners will acquire the company’s lean retail operations for $ 1.75 billion in cash and debt.
The approval of the sale comes a week after lawyers for JC Penney announced a settlement with nearly all of its creditors groups that locked down support for the sale and marked a turning point in a bankruptcy case that was marked by struggles between lenders. However, a group of shareholders – whose investments will be wiped out – remained opposed to the deal.
JC Penney filed for bankruptcy in May with nearly $ 5 billion in debt. The company was one of a number of retailers, including J. Crew Group Inc, Neiman Marcus Group and Brooks Brothers, who filed for Chapter 11 protection amid the coronavirus pandemic.
James Cash Penney started the business in 1902, opening the first store in Wyoming. JC Penney went public in 1929 and, over the following decades, became ubiquitous in the United States. The business has started to stumble in recent years as e-commerce has taken its toll on traditional retailing.
Reporting by Maria Chutchian; additional reporting by Kanishka Singh; Editing by Cynthia Osterman and Anil D’Silva