JC Penney’s store in Laguna Hills, California
Scott Mill CNBC
According to the lawyer of the department store chain, for the bankrupt JC Penney liquidation is “not in the cards”.
Penny is moving forward to the sale, which is due to end this fall, said attorney Joshua Sussberg of Kirkland and Ellis during a court hearing Wednesday afternoon.
“I mean, unequivocally, we haven̵7;t had any liquidation discussions,” Sussberg said of Penny’s restructuring process. “It’s just not in the cards.”
Sussberg drew attention to a report earlier this week from the New York Post, which said that private company Sycamore plans to bid $ 1.75 billion to buy a 118-year-old department store chain and merge it with Belk’s competitors.
He called the story “uninformed” and said that Sycamore’s plans to merge Penny with Belk were “completely untrue.”
Sycamore declined to comment.
There are three separate auctions for Penny’s real estate and other assets that would force the trader to run his own stores, Susberg said. He declined to name bidders, saying the proposals were confidential.
On May 15, Penny filed for bankruptcy protection against Chapter 11, out of debt and beaten by a coronavirus pandemic.
Earlier this month, the company announced it would lay off about 1,000 employees as it moved forward, closing about 150 jobs in the United States. When the retailer applied, it was still operating in about 860 stores.
Penny said all stores have since reopened, following a temporary closure due to the Kovid-19 crisis.
He said his 173 malls continue to operate better than 520 stores in closed malls. Out-of-mall store sales are down about 26 percent, and Penney Mall sales in malls are down about 33% since their opening.
According to Sussberg, the department store chain continues to talk to its landlords to agree on the best rent, which allows the company to reduce costs.
According to a study conducted by S&P Global Market Intelligence, forty retailers, including Penny, filed for bankruptcy in 2020. The list is expected to grow.
Before the Kovid-19 crisis, which devastated the US economy, there were already many problems, forcing shops to be considered integral and shopping malls closed. The pressure has only increased because for an industry that is already undergoing seismic shifts in consumer behavior and desired shopping destinations. The dominance of department stores in retail is declining.
According to Sussberg, Penny aims to reach a “mass consensus” on his strategy for moving forward by next month.