The US Bankruptcy Court for the Southern District of Texas on Monday approved a rescue deal, which will allow the retailer to emerge from bankruptcy before the upcoming holiday season, the company said in a statement
- JCPenny wins US court approval
- Bangladeshi RMG makers to see heyday
- Some 60,000 jobs to be saved
- Lenders to forgive $1billion JCPenny's debt
The Bangladeshi suppliers of the American retail giant JCPenney who were in hot water regarding the uncertainty about their payment are likely to see better days as the company has obtained a US court approval for a fresh start.
The US Bankruptcy Court for the Southern District of Texas on Monday approved a rescue deal, which will allow the retailer to emerge from bankruptcy before the upcoming holiday season, the company said in a statement.
The rescue deal is expected to save approximately 60,000 jobs.
JC Penney filed for bankruptcy in May with about $5 billion in debt, and was one of several retailers, including J. Crew Group, Neiman Marcus and Brooks Brothers that sought Chapter 11 protection during the pandemic.
Sources said lenders led by H/2 Capital Partners will excuse $1 billion in debt in exchange for 160 properties and six distribution centres while Simon Property Group and Brookfield Property will acquire JCPenny's retail operations for $1.75 billion in cash and debt.
Asking not to be named, a JCPenney Bangladesh official said there will be a positive impact on apparel business in Bangladesh.
The Bangladeshi suppliers also welcomed the move, saying that they will wait for the execution of the deal, but some also expressed their concern over the uncertainty of their outstanding payments.
Bangladesh Garment Manufacturers and Exporters Association's (BGMEA) former president Shaiful Islam Mohiuddin said: "This is good news for the apparel suppliers as over 100-year-old retail giant would be able to rescue itself.
The Business Standard (TBS) has tracked down dozens of suppliers of JCPenney that faced order cancellations and withholding of order worth around $3.5 million during the pandemic.
BGMEA vice-president Arshad Jamal (Dipu) asked the suppliers to discuss with the liquidators to solve their previous trade dispute.
In USA and Canada, usually, liquidators are prioritised to solve local or internal dispute at first, and then external issues.
Industry insiders said a total of 22 employees are working for the retailer's Bangladesh office, and they source about $300 million worth of goods from Bangladesh annually.
Of the amount, goods worth $160 million are sourced through the liaison office, and the rest through several buying agents such as Epic Indiana, great China importer, TBS Importer and Li & Fung.
"Our goal from the beginning of this process has been to ensure that JCPenney continues to serve customers for decades to come and this Court approval accomplishes that objective," said Jill Soltau, Chief Executive Officer, JCPenney.
"We appreciate the efforts of the Court and the support of our creditors in this process and putting us in a strong position to build on JCPenney's long track record of taking care of our associates, customers, vendor partners and communities."
The CEO applauded their associates, whose hard work and persistent dedication to serving customers, he viewed are important for JCPenney to reach this significant milestone.
He stated they want to close the OpCo (operating company) transaction, and remain focused on implementing their plan for renewal to offer compelling merchandise, deliver an engaging experience, fuel growth and build a result-minded culture.
The OpCo transaction remains the subject to additional closing conditions and is expected to close in late November 2020, added Jill Soltau.
Earlier the brand was also getting $990 million from shareholders for this reason. The filing for bankruptcy protection is a required step for the restructuring process of a US company.
JC Penney is one of the largest US retailers to file for bankruptcy in recent years. It has more stores than other troubled US companies such as Sears, Toys "R" Us, or Sports Authority – when they filed for bankruptcy.
The company has about 850 stores across the United States and Puerto Rico, and about 90,000 employees across the globe.
Founded in Kemmerer, Wyoming in 1902 by James Cash Penney, its first store, named The Golden Rule, set the standard by which they have operated for over a century.
JCPenney reached its peak number of stores in 1973, when it operated just over 2,000 locations across the US. The company blamed the Covid-19 pandemic for the need to file bankruptcy.