Daily Management Review

Bankrupt retailer J.C. Penney will be bought by landlords


The two largest owners of shopping malls in the United States, Simon Property Group Inc. and Brookfield Property Partners LP, agreed to purchase the American department store chain J.C. Penney Co., which filed for bankruptcy, for $ 800 million. This was reported by the press service of the retailer.

Simon and Brookfield, J.C. Penney have reached an agreement on the deal, the company said.

The chain, with 118 years in America, filed for bankruptcy under Article 11 of the U.S. Bankruptcy Code in May 2020. The company couldn’t cope with the crisis caused by the coronavirus pandemic. If the deal is approved by the bankruptcy court, it will avoid the closure of hundreds of points in shopping centers across the country. The deal also means job security for most of J.C.'s 70,000 employees.

A group of lenders including H/2 Capital Partners LLC, Sculptor Capital Management Inc., Brigade Capital Management LP and Sixth Street Partners have given their consent in the expectation that J.C. Penney will be able to make money selling clothes, cosmetics and kitchenware, despite the serious problems facing the US retail sector, writes The Wall Street Journal.

According to the sources of the publication, about 490 of the remaining 650 J.C. department stores will be fully owned by lessors. They will lease the other 160 stores, as well as distribution centers from creditors, who will receive these assets in exchange for writing off part of the company's debt totaling $ 5 billion. At the time of filing for bankruptcy, J.C. Penney had about 850 outlets.

Simon, the largest U.S. mall owner, and Brookfield will pay approximately $ 300 million in cash and take on $ 500 million in debt, The chain's market value is estimated at $ 1.75 billion.

This is Simon's third acquisition of a bankrupt tenant in partnership with Brookfield in the past four years. Property owners have teamed up to buy clothing retailers Forever 21 Inc. in February and Aeropostale Inc. in 2016.

source: cnn.com