A U.S. judge has approved a deal to rescue J.C. Penney Co Inc from bankruptcy proceedings averting its liquidation that would have placed the beleaguered department store chain out of business and jeopardized thousands of jobs.
Following the approval from the Bankruptcy Court for the Southern District of Texas, the deal will allow the 118-year-old retailer to emerge from bankruptcy before the crucial holiday season, said the company in a statement.
The rescue deal is expected to save at least 60,000 jobs.
As part of the deal, lenders led by H/2 Capital Partners will forgive $1 billion in debt in exchange for 160 properties and six distribution centers. Mall operators Simon Property Group and Brookfield Property Partners will acquire the company’s trimmed retail operations for $1.75 billion in cash and debt.
The deal comes in the wake of J.C. Penney’s lawyers announcing a settlement with most of its creditor groups that locked in support for the sale and marked a turning point in a bankruptcy case that has been marked by inter-lender fighting.
The deal however is being opposed by a group of equity holders whose investments will be wiped out.
J.C. Penney had filed for bankruptcy earlier in May this year with around $5 billion in debt. In 1902, James Cash Penney had launched the company and had opened the first store in Wyoming. The company went public in 1929 and over the next several decades became ubiquitous across the United States. The company’s business faced headwinds from e-commerce gaining traction from consumers.