JC Penney settles down with lender group ahead of sales hearing
JC Penney and its senior majority lenders have reached a deal with the retailer’s minority group of senior lenders, paving the way for a bankruptcy sale hearing now scheduled for November 9.
The parties revealed the settlement agreement, which was negotiated in a parallel mediation process, ahead of a sale hearing originally scheduled for Monday afternoon. The settlement agreement still needs formal approval from the Texas bankruptcy court.
The deal would resolve objections in recent weeks that have been raised by the retailer’s group of senior minority lenders, which includes Aurelius Capital Management LP, Bank of America NA and others, to certain aspects of the planned sale of Penney.
In recent months, the retailer has negotiated a planned continuity sale that would divide the company into a real estate business and operating company, a complex sale that lawyers for the parties told the court took several weeks of round-the-clock negotiations to come to fruition.
Under the terms of the deal, which were confirmed in an asset purchase agreement last month, owners Simon Property Group and Brookfield Property would take over the operating company which would include Penney’s retail business. Its group of majority lenders, which presented a global credit offer, would take over the real estate activity.
Under the terms of the planned sale, the owners would lease sites to Prop Co. through a master lease, details of which are still being finalized, Penney’s said in a file released Monday. In light of the developments, U.S. bankruptcy judge David Jones has accepted the parties’ request to delay the sale hearing for a week, until November 9.
“JCP, Simon and Brookfield and the Majority Lenders continue to finalize the Master Lease Agreement documentation to reflect the previously agreed resolution of all outstanding business issues through mediation with Judge Isgur,” wrote the detailing in his file Monday.
“Now, with broad consensus and all regulatory approvals in hand, JCP is ready to move forward and perform a value-enhancing reorganization well before the holidays. ”
A representative for JC Penney declined to comment beyond the filing, and lawyers for the top minority group did not immediately comment.
On Monday, Penney’s said it also reached an agreement with the unsecured creditors committee that would address all of its objections to the sale.