J.C. Penney is on the path to joining the likes of J.Crew and Neiman Marcus in declaring bankruptcy, with the 118-year-old retailer close to securing $450 million in funding to tide it through a Chapter 11 restructuring.
The funding would be smaller than the $1 billion J.C. Penney was initially seeking, but would still allow the retailer to re-employ furloughed workers and re-open its stores to sell down inventory, as well as negotiate with creditors.
As part of the discussions, the company would be able to draw $225 million of the bankruptcy loan, with the rest of the funds to be received based on how it does against its budget.
J.C. Penney announced at the end of March that it was extending the shutdown of its portfolio of 850 stores and its head office, and furloughing the majority of its hourly-wage employees. The retail chain skipped two debt payments in the last month.
Even so, the Plano, Texas retailer said in a Securities and Exchange Commission filing on Tuesday that its board has agreed to accelerate millions in “performance” based compensation for several senior executives.
Specifically, the company’s board has agreed to grant $10 million in awards based on 2019 performance that were originally scheduled to pay out at the end of the 2021 fiscal year, including a $4.5 million payout to CEO Jill Soltau.
As part of the bankruptcy filing, the company is in talks with investment firms KKR, Ares Management, Sixth Street Partners and Apollo Global Management for a deal in which they would take on some of the company’s debt in exchange for a controlling equity stake.
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