JCPenney is reportedly planning to file for bankruptcy, sources have said. According to a report from the Today Show, unnamed individuals close to the situation have said that the department store has plans to file for bankruptcy. This would be a reality in the event that negotiations with financial investors do not foster an agreement. The sources stated that the filing could come by Friday, but that it may be delayed if the negotiations carry over into the weekend.
A follow-up report from CNN stated that the company may have another week to make the filing. A spokesperson declined to comment, but in a financial filing on Friday JCPenney stated, "The company had entered into such grace period in order to evaluate certain strategic alternatives, none of which have been implemented at this time and which continue to be considered." While the coronavirus has no doubt had an impact on the company, Today notes that JCPenney's sales have fallen annually since 2016, resulting in the company now planning to close between 180 to 200 stores.
JCPenney has been hoping to avoid bankruptcy, but at this point it seems likely. The company has been working on getting a $450 million loan from lien lenders that would help it through the bankruptcy process. However, this loan would come with provisions that will require JCPenney to achieve specific goals in order to be granted the second half of the loan.
Notably, JCPenney is not the first — or only — company to wind up in this situation, as fellow department store chain Neiman Marcus has officially filed for bankruptcy. USA Today reported that the company shared the news, and then added that it has no plans for "mass store closings" on a permanent basis. The chain has temporarily shut down all of its stores, however, due to the coronavirus pandemic. "We will reopen our doors as it is safe to do so based on the status of the pandemic," read a statement from Neiman Marcus.
"The Chapter 11 process will not impact the timing of our store re-openings, but it will ensure we are stronger financially when we do. If there were to be future store closings it would be an operational decision on a case by case basis," the statement added. Additionally, Neiman Marcus claims that it has obtained support from "a significant majority of its creditors to undergo a financial restructuring, substantially reducing its debt load and interest payments and supporting continued operations during the COVID-19 pandemic and beyond."