May 15 (UPI) — Big box retailer JC Penney filed for bankruptcy Friday after making a $17 million interest payment.
After years of dwindling sales capped off by the coronavirus pandemic that has shuttered its stores for weeks, the company said it secured $900 million in debtor-in-possession financing. The funds will ensure JC Penney remains open while it works its way through bankruptcy.
“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,” CEO Jill Soltau said.
“While we had been working in parallel on options to strengthen our balance sheet and extend our financial runway, the closure of our stores due to the pandemic necessitated a more fulsome review to include the elimination of outstanding debt.”
In a Securities and Exchange Commission filing Friday, JC Penney said the $17 million interest payment was due last week but has been made inside a grace period of five business days.
“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,” the company wrote in the filing.
JC Penney also said its current financial status is at “known and unknown risk” partly due to the coronavirus pandemic, and is “out of the company’s control.”
“Those risks and uncertainties include … the potential outcome of the company’s evaluation of strategic alternatives and the company’s debt levels, liquidity and ability to access financing sources and capital markets, in particular as the company manages its business through the COVID-19 pandemic and the resulting restrictions and uncertainties in the general economic and business environment,” the SEC filing states.
JC Penney skipped a $12 million interest payment last month, beginning a 30-day grace period that expired Friday.
The company announced in January it planned to close 33 stores in a move that would save $65 million annually.