It’s widely believed that Penney’s will reveal it is filing for bankruptcy protection.
J.C. Penney Co. Inc. halted trading in its a shares this morning on expectations that an announcement is expected from the company.
The company, like many other retailers, has temporarily closed stores and furloughed the majority of its store associates due to COVID-19. However, Penney’s did disclose Friday morning that it made a $17 million interest payment that was due May 7 on a senior secured term loan credit facility. Under the credit and guaranty agreement governing the term loan Facility, Penney’s had a grace period of five business days to make the interest payment before being in default.
Penney’s, which has been suffering from declining sales and profits and debt obligations, has been negotiating with potential lenders for financing. There has been some speculation that major mall operations could be interested in partnering up to purchase Penney’s to keep it operating. Permanent store closures by Penney’s could lead to additional retailers deciding to act on co-tenancy lease clauses allowing them close their stores without penalty in the event of a major anchor departure.
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