After the COVID-19 crisis closed its retail locations for a time and changed its turnaround plans, JCPenney is reportedly looking into filing for bankruptcy. The department store retailer has sufficient cash to survive in the months to come, but the company is taking a bankruptcy filing into consideration as a method to reconfigure its finances that are not sustainable and save on debt payments to come, Reuters reported.
The COVID-19 outbreak has impacted traditional operators of department stores as well as other merchants that needed to shutter stores to stem the spread of the coronavirus. These firms were having difficulty already as shoppers moved to eCommerce before the coronavirus infected over 500,000 Americans and brought about over 23,000 deaths.
JCPenney, for its part, has reportedly not come to any final conclusions on how to handle its strained finances. The company is also thinking about requesting creditors provide it with some relief via transactions that would reconfigure debt outside of proceedings in bankruptcy court. In addition, JC Penney could reportedly potentially secure rescue financing.
A representative for JCPenney said in a statement that the retailer “has been engaged in discussions with its lenders since mid-2019 to evaluate options to strengthen its balance sheet and maximize its financial flexibility, a process that has become even more important as our stores have also closed due to the pandemic.”
JCPenney had not been successful in convincing creditors earlier in 2020 to reconfigure and lengthen due dates on parts of its almost $4 billion in long-term debt. But the retailer had made progress on its turnaround attempt in recent times, as it met or came out ahead of guidance on 2019 financial goals and enhancing sales at some locations.
In November, news surfaced that JCPenney was looking to make a comeback as it experimented with new and innovative ideas at a Texas location as it chief executive attempted to revive the struggling business.