A March 25 BMO Capital Markets Corp. report from analyst Wayne Hood estimated that the company will burn through $2.3 billion in cash over the next three years.

Hood isn't ruling out a Chapter 11 filing by 2014: "In our view, a Chapter 11 reorganization could potentially enable the company to overcome restrictive covenants and reaccelerate capital spending and emerge a stronger company. We believe the company would be able to get DIP financing to effect this transformation as we believe underlying real estate could be more easily lined up."

The company owns 38.7% of its store base, or 429 locations, for an estimated 55 million square feet. The company has 123 ground-leased locations and 552 leased locations, the report said.

Filing for Chapter 11 clearly "would not be supported by Pershing Square Capital Management, where the economic interest in the company is about 25.1%," Hood wrote. However, a bankruptcy filing would allow the company to shed legacy assets and eliminate the challenge of developing a business model that works for its large and small stores, the report said.

Which is where private equity could come in. Sources said that firms such as Apollo Global Management LLC and Leonard Green & Partners LP are studying a potential buyout of J.C. Penney. Firms such as these could provide the kind of capital injection J.C. Penney would need to complete its transformation.

J.C. Penney said it wouldn't comment on market rumor or speculation. Pershing Square declined comment. Apollo and Leonard Green didn't return calls seeking comment.

Then, there's the real estate portfolio, always something to examine in a relatively cash-poor, asset-rich situation.

"There is real estate value at J.C. Penney, both in the owned real estate and in the leased real estate," said Cedrik Lachance, managing director at Green Street Advisors Inc., a real estate and REIT advisory firm.

He stressed, however, that the issue is not whether the real estate is owned or leased, but where the property is located.

For example, last year, Sears Holdings Corp. sold 11 properties to General Growth Properties Inc., six of which were leased. But because they were long-term leases with value, Sears asked, in essence, to be paid to leave those properties and General Growth was happy to oblige.

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