Retail Giant JC Penney Struggles with Debt Restructuring Plan
Following the initial preventive measures taken by the US government, several states instituted partial lockdown measures as a means to combat the spread of the COVID-19 pandemic. With the restrictive measures in place, an unprecedented number of companies have sought bankruptcy protection within the past three months.
As states reopen and resume their businesses, the financial strain caused by the raft of measures instituted to combat the pandemic is still being felt across the various economic sectors. Businesses are still tittering on the edge of bankruptcy as they struggle to strike a balance between creditors and their employee’s benefits.
The latest among retail giants struggling with bankruptcy as a result of the COVID-19 combating measures is J.C Penney. The retail store’s lawyers are currently pushing for a speedy exit from bankruptcy proceedings following prolonged closures in their numerous stores.
California bankruptcy law allows companies that are pursuing Chapter 11 bankruptcy to continue operations during its bankruptcy proceedings. Such a step is essential to ensure JC Penny’s operations as the state opens following the prolonged lockdown.
JCPenney employs a substantial number of California residents in its various branches across the state. Its pursuit of Chapter 11 bankruptcy protection is in line with California bankruptcy laws that protect such businesses as they restructure their loans and debts with creditors.
It is expected that the company will resume its operations in California while undertaking the restructuring plan with its creditors. The company already obtained the go-ahead from bankruptcy courts to continue paying its staff and vendors delivering merchandise to their retail stores.
In a move to hasten the Chapter 11 bankruptcy reorganization plan, the company obtained clearance to use over $500 million of its cash on hand to clear the debts from its employees and vendors.
The move will be beneficial to California residents employed in JC Penney’s stores all across the state as well as the vendors affiliated with the brand. This comes as employment claims soared early May in the employees’ following the prolonged lockdown.