Simon Property and Brookfield, and J.C. Penney’s main creditors will become its new owners as it emerges from bankruptcy by Thanksgiving.
JC Penny filed for Chapter 11 in bankruptcy proceedings in May due to collapse during the coronavirus pandemic.
Under the agreement, America’s largest mall owners to buy the 118-year-old retailer for $1.75 billion. J.C. Penney will close about a third of its locations in the next two years, leaving 600 stores open.
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According to AP, the ‘purchase’ includes a cash flow to the JC Penny fund alongside new loan agreements in the redeployment.
The U.S. Bankruptcy Court for the Southern District of Texas approved tonight the agreement, after a lengthy hearing in court on Monday. All of J.C. Penney’s retail and operating assets being acquired by Brookfield Asset Management Inc. and Simon Property Group through a combination of cash and new term loan debt.
Despite the agreement – the future for JC Penny is not rosy. The holiday season is here but shoppers stay away from the malls and stores for safety reasons and turned to shop more online.
At the same time, competitors as Amazon, Target, and Walmart are getting stronger as they offer one-stop shopping as well as low prices.
“Our goal from the beginning of this process has been to ensure J.C. Penney will continue to serve customers for decades to come and this court approval accomplishes that objective,” said Jill Soltau, CEO of the company, in a statement.