Bankrupt J. C. Penney has rejected 144 store leases as it moves forward on plans that could see the retailer exit Chapter 11 proceedings before year-end.
The list of 144 rejected leases was filed in Penney’s bankruptcy case on Thursday. A Penney’s spokesman said that the leases are part of the stores the company previously said it would close, and that some have already been shuttered.
Thursday’s filing comes when Penney’s is hoping to button up a sale and exit Chapter 11. It already has a nonbinding agreement with a group of first-lien lenders and its two largest landlords for the operating component of the business. Valued at $1.75 billion, the agreement in principle still needs to be finalized as an asset purchase agreement by Oct. 16. While a minority group of first-lien lenders wants to put in a bid of its own—for what portion of Penney’s assets is still unclear—questions remain over whether it would actually be able to amass the necessary funds. Penney’s for now has a sale hearing set for Nov. 2 and a confirmation hearing on its reorganization plan on Nov. 24-25, which is expected to pave the way for a Chapter 11 exit in December. That’s all presuming there are no more hiccups along the way.
At Wednesday’s court hearing as the Aurelius Capital Management-led minority first-lien lender group pushed for a chance to make a competing bid, Penney’s bankruptcy attorney Joshua Sussberg from Kirkland & Ellis noted that the company must move quickly to confirm a sale and plan of reorganization. He said vendors have generally been supportive, but that “many are waiting for a binding deal and closure to fully support, or resume supporting the company.”
Some vendors aren’t shipping goods, he added, which the retailer needs if it wants to compete during the cutthroat holiday selling season.