Negotiations to sell JC Penney to one of the nation’s largest mall owners or other investors have stalled, putting the retailer on the brink of a possible chain-wide liquidation.
The company had been negotiating a sale to one of three potential buyers, including a consortium that included Simon Property Group, the owner of the country’s largest shopping center. Simon had reportedly been in talks to convert certain JC Penney and Sears locations in Simon Malls to Amazon distribution centers.
“We have reached a dead end,” Joshua Sussberg, a Kirkland & Ellis attorney representing JC Penney, said in a court hearing Monday. “Our path in the red zone has stalled.”
It did not name Simon, but said the retailer was in advanced negotiations with a real estate company that owned more than 160 JC Penney locations to close a deal before the talks fell apart.
The company is turning to negotiations for a “credit offer” by its bankruptcy funders, including H / 2 Capital Partners LLC and Silver Point Capital LP. If such a deal goes through, the lenders would own JC Penney, probably as a much smaller company than it is today.
“We are going to do everything humanly possible to ensure that JC Penney will be around for the foreseeable future,” Sussberg said.
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Sussberg said the company plans to negotiate the deal within the next 10 days.
“We are absolutely focused on saving 70,000 jobs and maximizing the value of these properties,” said Sussberg.
Andrew LeBlanc, an attorney representing the financiers, said they are open to a deal. But “this is really the last time we can do this,” he said.
Bankruptcy judge David Jones, who has repeatedly expressed his preference to save JC Penney from liquidation if possible, asked Sussberg, “Is there anything you think you can do to maximize the opportunities that are available to debtors?”
Sussberg said it would be helpful to get the judge’s approval to close unprofitable locations that the company plans to liquidate as part of its restructuring plan. JC Penney has started plans to close more than 240 locations, leaving it with about 600 remaining.
Follow USA TODAY reporter Nathan Bomey on Twitter @Nathan Bomey.