One of the most notorious department store chains in the U.S., JC Penney, has filed for Chapter 11 bankruptcy protection on May 15th.
Despite being in business for 118 years, the company was not prepared for the COVID-19 pandemic struggles. It was already $4 billion in debt.
The company said it has an agreement with most of its lenders on the turnaround plan that will allow it to stay in business. According to Reuters, JC Penney can shutter roughly one-quarter of the chain’s 850 stores and move forward with a leaner business model. It will also borrow $450 million from the lenders to pay for operations during the reorganization.
Right now it is unclear what will happen to an estimated 85,000 employees of the company.
“Until this pandemic struck, we had made significant progress rebuilding our company under our Plan for Renewal strategy and our efforts had already begun to pay off,” said CEO Jill Soltau according to CNN. “Implementing this financial restructuring plan through a court-supervised process is the best path to ensure that JCPenney will build on its over 100-year history to serve our customers for decades to come.”
JC Penney reported $10.7 billion in net sales in 2019, down 8.1% from the year prior, says CNBC.