Jim Cramer Needs to See 'Actual' JCPenney Bankruptcy to Believe It

Katherine Ross

Is JCPenney on its last legs?

There have been reports that the struggling retailer is close to filing for Chapter 11 bankruptcy protection. 

Reuters reported late Tuesday that J.C. Penney's decision to shutter all of its 850 department stores, while furloughing 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. 

This report followed Moody's Investors Service cutting the Plano, Texas-based group's credit rating to Caa3, the lowest on the junk rating scale, and tagged it with a negative outlook earlier this week.

“Although JCPenney liquidity is adequate, the widespread store closures as a result of the coronavirus pandemic and the continued suppression of consumer demand is expected to pressure JCPenney’s (earnings), impede its turnaround strategy and weaken its leverage to unsustainably high levels,” said Moody’s vice president Christina Boni.

JCPenny officials were not immediately available for comment when contacted by TheStreet outside of regular business hours Wednesday.

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