Coronavirus killed JC Penney. That was the message of the company’s lawyer Josh Sussberg, who warned how mistaken it would be to dismiss the impact of the pandemic. “This is absolutely about the coronavirus, this is about a governmental shutdown and about us all being in video chat for this hearing.” As if presenting the retailer’s case online wasn’t strange enough, he was doing so on Saturday, a bizarre day for major bankruptcy proceedings. He said the company had been about to sign a funding deal that would have brought in new working capital when the virus hit. JC Penney could still get the bankruptcy funding, worth $900m, including $450m of new money. But after collecting the first half of the money in June, it will have to convince two-thirds of its lenders to approve the deal by July 15th in order to collect the second half.
Failure after that to win third-party funding by August 15th would mean it must automatically cease all attempts to save the company and to proceed to liquidation. Recovery was always going to be difficult, but it comes at a time when virtually all retailers are stuck with out of date collections they need to sell at deep discounts.
