As widely expected by investors and retail sector experts, J.C. Penney (NYSE:JCP) has filed for Chapter 11 bankruptcy protection.
The troubled company, already hobbled by the retail apocalypse consuming the sector in recent years, was dealt a crippling blow by the SARS-CoV-2 coronavirus outbreak. The filing was announced after market close on Friday.
The following day, J.C. Penney said that the "first-day motions" it made in relation to the bankruptcy filing had been approved. First-day motions are requests to the court for the affected company to be allowed to pay selected creditors in order to continue its operations. According to the retailer, these approvals will allow it to continue paying wages and certain benefits to employees, and to pay vendors.
Meanwhile, the company will attempt to consolidate its business and escape bankruptcy through several measures. One is by closing stores; it currently operates around 850 brick-and-mortar locations, a number J.C. Penney says will be reduced in phases during the bankruptcy process. It said it will provide more specific information, such as locations affected, over the next few weeks.
The company currently has around $500 million in cash on its books, and has received commitments for roughly $900 million in financing to use to help it get out of bankruptcy. It said it has entered into a "restructuring support agreement" with entities holding around 70% of its first lien borrowings to retire some of that debt.
Earlier on Friday, J.C. Penney announced it had made a $17 million interest payment that was due earlier this month on its term loan. Likely because of this, its stock closed 21% higher on the day, eclipsing the gains of the major stock indexes.