In the latest development in J. C. Penney’s Chapter 11 court case, the bankrupt chain now must contend with a newly formed unsecured creditors committee while it has its hands full reopening stores.
Nine companies were named to the committee to represent the interests of all unsecured creditors in Penney’s bankruptcy, according to a court filing Thursday, which shows the diversity of companies from fashion and footwear to real estate and banking. Nike USA, PVH, Simon Property Group, Byer California and Alfred Dunner are now committee members alongside BOKF, N.A., Pension Benefit Guaranty Corp., UMB Bank N.A. and Washington Prime Group.
The mass merchant filed for bankruptcy court protection on May 15, with plans to split into a publicly traded entity that would acting as a real estate investment trust alongside another operating company, which would also lease back some store locations from the REIT.
But Penney’s has to move quickly to generate sales. Reopening stores would help to generate sales and provide a base for projections when it seeks the support and agreement of first-lien lenders, which must be completed by July 14 under the current timetable. Once that’s in place, Penney’s must secure exit financing commitments by Aug. 15. Both deadlines, once met, would enable the mass retailer to exit bankruptcy sometime in September.
Under Penney’s current business model projections, the department store chain will emerge with a streamlined 604-store footprint. That’s 242 fewer stores than the 846 it operated when it filed its Chapter 11 petition two weeks ago.
Of course, Penney’s isn’t the only retailer seeking to open stores as quickly as it can while still meeting state and local government mandates, as well as those from the Centers for Disease Control and Prevention on social distancing, sanitary precautions and other protective measures.
On Thursday, Penney’s said it is providing personal protective equipment for associates, and will stagger shift schedules to minimize associate contact at the 150 reopened stores across 27 states. In addition, plexiglass shields will be placed at registers along with additional safety signage to remind everyone about the need for social distancing. “In addition to offering contactless checkout from customers’ mobile devices via barcode, contact-free curbside pickup is now available at all reopened stores,” said Penney’s, which now has one-third of its store network, or 304 locations, back in business. It is also offering designated shopping hours for at-risk customers at all stores on Wednesdays and Fridays from 11 a.m. to noon.
Penney’s plans to have nearly 500 stores reopened by June 3. “We are excited to welcome back our loyal customers and dedicated associates. Feedback has been overwhelmingly positive as we reopen our doors, focused primarily on our enhanced safety measures,” said Jim DePaul, Penney’s executive vice president of stores.
Other firms are also starting to reopen their stores now that many states have eased restrictions that were imposed in mid-March at the start of the coronavirus outbreak in the U.S.
Capri Holdings Ltd. said Thursday it would have the majority of its Versace and Michael Kors stores reopened by early July.
Also on Thursday, Under Armour said nearly 50 percent of its North America are now open. It began reopening stores on May 15, and said that in “regular consultation with government and public health officials, the company will continue to reopen additional stores on a case-by-case basis.”
The Baltimore-based athletic wear firm said it has initiated some company-wide protocols for the initial phases of its store reopening plan, which includes training staff on health and safety procedures prior to reopening, holding back returned products for 72 hours before returning the merchandise to the sales floor, sanitizing payment point of contact in between each use and reducing store hours to allow time for new cleaning procedures. In addition, customers and associates must wear face masks, and Under Armour has imposed limitations on store occupancy. Hand sanitizing stations are located throughout stores while new signage instructs shoppers of social distancing guidelines.