J.C. Penney announced Friday it has filed for bankruptcy, marking the largest retail industry casualty thus far during the coronavirus pandemic.
The 118-year-old department store had already racked up a substantial amount of debt in recent years, a situation that was exacerbated by the sharp economic fallout of COVID-19.
“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,” said CEO Jill Soltau.
The company maintained it is still continuing to reopen stores and offer “Contact-free curbside pickup service” at all of its locations.
“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 com,” Soltau said. “We have a newly refreshed, highly experienced team of retail executives who remain focused on rebuilding our business and restoring financial strength to JCPenney.”
The company, one of the nation’s largest retail chains, has been suffering from declining sales for years and built up over $4 billion in debt.
The chain has long reportedly suffered from a lack of strategy to grapple with its burgeoning debt, leaving it on poor footing to deal with widespread closures forced by the coronavirus pandemic.
J.C. Penney said it will continue reaching out to customers to try to improve its services and that it is confident it will ultimately once again be a profitable company.
“While the challenging market conditions have impacted the Company’s ability to meet its current operational and financial objectives, the Company remains focused on returning JCPenney to sustainable, profitable growth by reestablishing the fundamentals of retail, re-envisioning its merchandise offerings, and rolling out new innovations,” it said.
The company said it had approximately $500 million in cash on hand as of the Chapter 11 filing date and has received commitments for $900 million in debtor-in-possession financing from its existing first lien lenders.
The bankruptcy announcement comes after J.C. Penney announced in a regulatory filing that it paid big-dollar bonuses to multiple executive officers after it announced it furloughed the majority of its hourly store associates.
As part of the deal, Soltau received $4.5 million, and separate $1 million were also awarded to Bill Wafford, executive vice president and chief financial officer, Michelle Wlazlo, executive vice president and chief merchant, and Brynn L. Evanson, who is also an executive vice president and the chief human resources officer.