The department store retailer is talking with existing lenders including Wells Fargo, Bank of America and JPMorgan Chase for debtor-in-possession financing that would keep J.C. Penney's operations funded during a court-supervised bankruptcy, the Journal reported, citing people familiar with the matter.
The loan package could total roughly $800 million to $1 billion.
A bankruptcy filing for J.C. Penney, which has been losing money for years, could take place within the next few weeks, the people told the Journal.
The company failed to make a $12 million interest payment that was due April 15, and entered into a 30-day grace period.
J.C. Penney isn't the only retailer suffering as the coronavirus pandemic forced the closure of its department stores. Macy's (M) - Get Report also is considered in financial difficulty and reports earlier this week said Neiman Marcus was preparing to seek bankruptcy protection.
Reuters reported last week that J.C. Penney's decision to shutter all of its 850 department stores and furlough nearly all of its 95,000 employees, may push the retailer into a Chapter 11 filing that could help it re-finance it near $4 billion in outstanding debts.
Bloomberg also has reported that J.C. Penney was working with restructuring consultants Alix Partners and has held talks with lenders amid the ongoing decimation of the U.S. retail sector from the coronavirus pandemic.
J.C. Penney fell 9.2% in premarket trading Friday to under 25 cents a share.