U.S. Bankruptcy Judge David Jones approved the famed retailer’s requests to keep paying employees and allowing for vendors to deliver merchandise.
“You said it’s fast, but fair. I want you to know that at least my looking at it says it’s not fast enough,” Jones said of JCPenney’s plan. “I am very worried about this. It’s why I’m having a hearing on a Saturday,” he said, adding that the company can use $500 million of its cash on hand, Reuters reported.
The firm, according to reports, employs around 85,000 people and has more than 800 locations across the United States.
A lawyer for the Texas-based chain said JCPenney needs to exit the bankruptcy proceedings in a few months to survive the strain of store closures amid the CCP (Chinese Communist Party) virus pandemic.
“This company needs to move incredibly quickly through this restructuring. If we don’t, the results could be disastrous,” said Joshua Sussberg, a Kirkland & Ellis LLP lawyer representing JCPenney.
Even before filing for bankruptcy, the firm has been weighed down by debt while sales have fallen for the past several years.
“The Coronavirus (COVID-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country. As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company,” CEO Jill Soltau said in a statement on May 15 when filing for 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,” her statement 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.”
JCPenney joins fellow department store chains Neiman Marcus and Stage Stores as victims of the CCP virus pandemic. A number of states have forced the closure of retailers deemed nonessential in a bid to contain the spread of the disease, leading to more than 30 million people to file for unemployment.
Aside from those, Nordstrom announced this month that it is forced to shut down 16 stores. The firm’s CEO, Erik Nordstrom, cited the CCP virus as the reason for the decision.
“We’ve been investing in our digital and physical capabilities to keep pace with rapidly changing customer expectations. The impact of COVID-19 is only accelerating the importance of these capabilities in serving customers,” he said.