J.C. Penney Sale Talks Ongoing as Due Dates Loom

October 15, 2020

J.C. Penney is still negotiating its planned sale to a group of first-lien lenders and landlords Simon Property Group and Brookfield Property, in a process that continues to drag on as key dates loom this week.

At this point in the process, certain nondisclosure agreements related to sale discussions have lapsed, which allowed the retailer to post certain financial projections for its operations from Oct. 4 to Jan. 2, 2021, along with its 8-k filing on Wednesday.

For the 13-week period the projections encompass up to January 2021, they forecast a net cash flow of $384 million, as well as projected expenses including $108 million in debt service and fees for the duration, as well as $66 million in disbursements to restructuring professionals during that time.

Those projections are not actual company financials — rather, they are ones that were made as part of sale discussions, according to the filing. But such numbers can offer some sense of the company’s finances to other interested parties in the case, bankruptcy attorneys said.

“Bankruptcy is generally a transparent process,” said Patrick Collins, bankruptcy and restructuring partner at Farrell Fritz PC, who is not involved in the J.C. Penney case, and spoke generally.

“If it’s about the bankrupt company, it’s going to be public in some shape or form eventually, because bankruptcy is all about disclosure of the financial condition of the company,” he said. “The projections are of interest to parties interested in putting in a bid [who] want to know what the projected performance, perhaps by a store [for example], will be.”

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