JC Penney is in talks for bankruptcy financing. Other retailers are faltering.

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The struggling retailer is seeking an $800 million to $1 billion loan to prop up at least some of its operations during a bankruptcy process, according to a Wall Street Journal report.

Photograph by Drew Angerer/Getty Images


JC Penney
would be on the way to filing for bankruptcy.

Embattled retailer JC Penney (ticker: JCP) is in talks with banks for an $800 million to $1 billion loan to prop up at least some of the operations during a bankruptcy process, according to a Wall Street Journal report citing people familiar with the matter, who said the final funding amount could change. These types of cash infusions are known as debtor-in-possession loans.

The entire retail sector was struggling with high debt and declining sales before the coronavirus pandemic prompted them to close stores. JC Penney is therefore far from the only retailer under pressure. The private company Neiman Marcus would be consider filing soon. Lord & Taylor, bought by fashion startup Le Tote last year, would have been watch option as well. And



Macy’s

(M) may want borrow against their real estate assets.

JC Penney skipped an interest payment on a bond due April 15and said it would use its 30-day grace period before an event of default to explore its options.

The department store has closed its windows, furloughed workers and deferred capital expendituresessentially stopping its recovery plan thanks to the widespread confinements put in place to stop the spread of the coronavirus.

It is currently in discussions for debtor-in-possession financing with its existing lenders, including



Wells Fargo

(WFC),



Bank of America

(BAC), and



JPMorgan Chase

& Co (JPM), but the financing will likely be syndicated so that other lenders can participate, according to the Journal report, and a bankruptcy filing could occur in the coming weeks. The retailer did not immediately respond to a request for comment.

Write to Alexandra Scaggs at [email protected]

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