JC Penney "plans to file for bankruptcy today"

JC Penney "plans to file for bankruptcy today"

JC Penney could file for bankruptcy as early as Friday morning, said sources familiar with the matter.

Insiders told CNBC that the company's advisers are currently working on a bankruptcy case.

However, they noted that final negotiations between the department store chain and its lenders could spill over the weekend, delaying filing.

JC Penney, which has 846 stores in the United States, aims to reorganize and get out of bankruptcy protection. He plans to permanently close between 180 and 200 stores, a figure that could vary depending on negotiations with creditors, the sources said.

If the company closes these stores, it will become the last major US retailer to succumb to the fallout from the coronavirus epidemic.

JC Penney (file image) may file for bankruptcy in the next 24 hours, sources said. Sources familiar with the matter said the company's advisers were currently working on a bankruptcy case which could arrive early Friday morning.

In February, JC Penney employed approximately 90,000 full-time and part-time workers.

Bankruptcy filing would put an end to a long decline for the 118-year-old department store chain, which faced nearly $ 4 billion in debt and competition from e-commerce businesses even before the start of the pandemic.

Plano, Texas-based company is negotiating with creditors for a so-called debtor's loan to strengthen its finances as it navigates bankruptcy proceedings, sources told Reuters last week .

The loan could total between $ 400 and $ 500 million, sources say. JC Penney declined to comment on Reuters' approach.

Retailers are feeling the brunt of the economic fallout from the pandemic as sales evaporate.

Last week, luxury department store chain Neiman Marcus and clothing retailer J. Crew filed for bankruptcy.

The US economy lost 20.5 million jobs in April, the largest decline since the Great Depression, according to the Department of Labor.

JC Penney ignored a $ 17 million debt payment last week and has only five days to fix it before defaulting. A 30-day grace period on a $ 12 million payment that the company ignored on April 15 ends Friday.

Bankruptcy filing would put an end to a long decline for the 118-year-old department store chain, which faced nearly $ 4 billion in debt and competition from e-commerce businesses even before the start of the pandemic.

 JC Penney store remains seen in North Carolina

According to a plan under discussion, JC Penney would come out of bankruptcy as two separate companies, sources said.

One of them is said to own part of the company’s real estate and to serve as the owner of the other entity operating the retailer's business, they said.

Creditors, many of whom are Wall Street hedge funds, would control companies in exchange for debt relief, they said.

JC Penney General Manager Jill Soltau told customers last week that stores have started to reopen gradually with caution

JC Penney's online sales have not been sufficient to compensate for the significant losses he suffered while keeping stores closed in the United States in response to closures to curb the spread of the coronavirus.

Although the company has enough cash to survive in the coming months, it has to pay $ 105 million in debt in June and about $ 300 million in annual interest charges. More than $ 2 billion in debt matures in 2023.

JC Penney's chief executive, Jill Soltau, told customers last week that stores had started to reopen gradually with precautions such as plexiglass shields on the registers and a small crowd.

The e-commerce revolution that has taken place in the 21st century has eroded JC Penney's business as it has done for other traditional retailers. The company is now also facing fierce competition from discount chains, including the Marshalls and TJ Maxx chains..

However, JC Penney had recently made some progress in his recovery attempt, meeting or exceeding the financial target guidelines for 2019 and improving sales in some stores.

But the coronavirus pandemic plunged the company into deep trouble.

Neiman Marcus filed for bankruptcy last Thursday in a Houston federal court. Neiman Marcus' closed headquarters in Dallas, Texas, is pictured on April 27

Operations at J.Crew will continue through restructuring and clothing can still be purchased online. The coronavirus epidemic has forced the company to temporarily close its nearly 500 stores in the United States.

Neiman Marcus filed for bankruptcy with a Houston federal court last Thursday.

He reached an agreement with the creditors to finance $ 675 million of the debtor in possession to help the operations while he tries to reorganize.

CEO Geoffroy van Raemdonck said they would continue to operate via digital platforms and branded relationships as well as in certain physical locations as states reopen after closings.

Neiman Marcus also said he would cede control to creditors under the deal that will eliminate $ 4 billion in debt. Its debt currently stands at around $ 5 billion.

Meanwhile, retailer J.Crew filed for bankruptcy on May 4 with a plan to avoid liquidation and reorganize debts through an agreement with its creditors.

The deal to eliminate its roughly $ 1.65 billion in debt will come in exchange for the transfer of the property to the creditors.

Operations at J.Crew will continue through restructuring and clothing can still be purchased online.

In addition to canceling the debt, J. Crew plans to close stores, although the final number he plans to close has yet to be determined, said someone familiar with the matter.

The coronavirus epidemic has forced the company to temporarily close its nearly 500 J. Crew and Madewell stores in the United States.