A JC Penney store in Laguna Hills, California
Scott Mlyn | CNBC
For JC Penney in bankruptcy, a settlement “is not in the cards,” according to the department store chain attorney.
Penney is moving forward with a sale that should be completed this fall, attorney Joshua Sussberg of Kirkland & Ellis said during a court hearing Wednesday afternoon.
“I want to say, unequivocally, that we haven’t had a single discussion about a liquidation,” Sussberg said of the Penney restructuring process. “It just isn’t in the cards.”
Sussberg drew attention to a report earlier in the week from the New York Post that private equity firm Sycamore planned to bid $ 1.75 billion to buy the 118-year-old department store chain and merge it with rival Belk.
He called the story “misinformed” and said, regarding Sycamore’s plans to merge Penney with Belk, “that’s completely untrue.”
Sycamore declined to comment.
Three separate offers are being considered for Penney’s real estate and other assets, which would keep the retailer operating its own stores, Sussberg said. He declined to name the bidders, saying the proposals are confidential.
Penney filed for Chapter 11 bankruptcy protection on May 15, burdened with debt and battered by the coronavirus pandemic.
Earlier this month, the company announced that it would lay off approximately 1,000 employees as it moved forward with the closure of nearly 150 locations in the United States. When the retailer introduced, it was still operating around 860 stores.
Penney said Wednesday that all stores have reopened since then, after being temporarily closed due to the Covid-19 crisis.
He said his out-of-mall locations, of which he has 173, continue to perform better than his closed-mall stores, of which he has 520. Sales at out-of-mall stores have declined approximately 26%, while that Penney store sales in shopping malls have fallen 33% since opening, he said.
The department store chain continues to talk to its owners to negotiate better rentals, according to Sussberg, allowing the company to cut costs.
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