Founded in 1902, J.C. Penney has filed for bankruptcy protection in the wake of the Covid-19 pandemic, following Neiman Marcus and J.Crew.

J. C. Penney has entered into a restructuring agreement with lenders holding approximately 70 percent of its highest priority, or first lien, debt. The deal includes the terms of a plan that is expected to reduce several billion dollars of debt, to provide increased financial flexibility to navigate through the Covid-19 pandemic, and to better position the U.S. retailer for the long-term, it said.

The company filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code with a court for the Southern District of Texas, in Corpus Christi. J.C. Penney plans to reduce its store footprint in phases throughout the Chapter 11 process. The retailer has nearly 850 stores across the U.S and Puerto Rico and runs the e-commerce site jcp.com.

In the motion filed with the bankruptcy court, it requested permission to end the leases of 20 sites, including 14 department stores.

In the meantime, the company continues to operate. Most of its locations were closed towards the end of March due to the pandemic but J.C. Penney has reopened 41 stores and is offering a curbside pickup service at seven others. Its e-commerce distribution centers continue to fulfill online orders and customer care centers are answering inquiries.

J.C. Penney has currently approximately $500 million in cash on hand. It has received commitments for $900 million in debtor-in-possession financing from its existing first lien lenders, which includes $450 million of new money. It estimates that the financing, combined with cash flow generated by its ongoing operations, to be sufficient to meet operational and restructuring needs.

The company will explore opportunities to maximize value, including the sale to a third party.