In a few short years, Gen-Zers and younger generations watching this iconic scene from Spike Like Us will have no clue what this "JC Penney" is that Chevy Chase was referring to.
The reason for that is because the iconic retailer which recently filed for bankruptcy, appears to be headed for liquidation with 70,000 jobs hanging in the balance.
According to Reuters, the company's talks with landlords for a rescue from bankruptcy proceedings reached an impasse, pushing the department store to the brink of collapse unless it can reach a deal within days to be taken over by lenders at which point the company will simply be unwound.
The discussions between the Plano, TX-based retailer and mall owners Simon Property Group and Brookfield Property Partners stalled over the weekend, said the company's lawyer Joshua Sussberg during a Monday court hearing which revealed that the negotiations have dragged on over lease terms.
While Sussberg said lenders were still prepared to rescue the 118-year-old company - and its more than 70,000 workers - depending on negotiations over the next 10 days, a lawyer for the lenders, Andrew Leblanc of Milbank, countered that there were "lots of hurdles" to reaching such a deal, describing negotiating an agreement on a short timeframe as a "heavy lift" ahead of the Sept. 10 deadline.
According to Reuters, J.C. Penney, which filed for Chapter 11 protection in May after the coronavirus pandemic forced it to temporarily shutter its nearly 850 stores at the time, is racing to reach a deal that would carve it into three parts: one would be an operating company housing its retail business, including intellectual property and hundreds of stores. Lenders would forgive portions of J.C. Penney’s $5 billion debt load to take control of two real estate investment trusts. One would hold 160 properties, with the other controlling the company’s distribution centers.
J.C. Penney had hoped to reach a deal with Simon and Brookfield to take over the company’s retail operations, but negotiations with the two malls were in the "red zone" earlier this month before hitting roadblocks, including an offer from the company submitted to the landlords over the weekend that received no response. The development would force J.C. Penney to close additional stores that at one point might have been saved, Sussberg said.
U.S. Bankruptcy Judge David Jones had previously urged parties to set aside what he labeled egos and negotiating postures to get a deal done.
"I hope everyone realizes how serious I am about this. I know where this is headed,” Jones said during Monday’s hearing.
He told a shareholder that declining to allow J.C. Penney to continue talks with lenders would result in all the company’s stores closing and “the death of an entity."
The company's lenders, which include hedge funds and private-equity firms financing its bankruptcy case, have agreed to explore forgiving debt to also take control of the company’s retail operations in addition to the two real estate investment trusts they envisioned owning.
"Our lenders are no longer going to be held hostage," Sussberg said. “Time is not our friend.”
Previously, LBO giant Sycamore Partners and Saks Fifth Avenue owner Hudson’s Bay also held discussions with JC Penney to take control of its retail business but were unable to reach a deal. The company continued talks with those suitors over the weekend, Sussberg said, though they did not reach any agreement.