J. C. Penney Company, Inc. (NYSE: JCP) today announced that it has received approvals from the U.S. Bankruptcy Court for the Southern District of Texas, in Corpus Christi, TX (the "Court") for the "First Day" motions related to the Company's voluntary Chapter 11 petitions filed on May 15, 2020, including approval for the Company to access and use its approximately $500 million in cash collateral.
Among other things, the Court has authorized JCPenney to continue paying non-furloughed associate wages, provide certain benefits to all associates, and to pay vendor partners in the ordinary course for all goods and services provided on or after the Chapter 11 filing date.
Jill Soltau, chief executive officer of JCPenney, said, "We are pleased to have received approval of these motions, which will enable us to continue implementing our Plan for Renewal and operating our business to serve the needs of our loyal customers. We thank the Court for convening on a weekend to ensure that JCPenney can hit the ground running on Monday with approval of our First Day motions, and we are appreciative of the widespread support we have received from our asset-based lenders and first lien lenders and noteholders as we manage through the current environment. By entering this restructuring support agreement with our lenders, we expect to reduce several billion dollars of indebtedness, provide increased financial flexibility to help navigate through the Coronavirus (COVID-19) pandemic, and better position JCPenney for the long-term."
As previously announced, JCPenney entered into a restructuring support agreement (the "RSA") with lenders holding approximately 70% of JCPenney's first lien debt to reduce the Company's outstanding indebtedness and strengthen its financial position.
JCPenney has approximately $500 million in cash on hand as of the Chapter 11 filing date. The Company will seek authorization at its second day hearing to access the $900 million in debtor-in-possession ("DIP") financing that it received from its existing first lien lenders, which includes $450 million of new money.