J.C. Penney just announced early this evening that it’s filing for Chapter 11 bankruptcy under the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, in Corpus Christi, TX (the “Court”), falling victim to COVID19 despite its best efforts in executing financial transformation strategy during the pandemic, and before it.
In states where stay-at-home orders are lifted and stores are allowed to reopen, J.C. Penney will continue to be open to their customers, and Chapter 11 Bankruptcy allows businesses to still operate, but all proceeds go to paying off creditors and debtors until inventory is completely sold out, and fixtures are sold before stores finally close.
As J.C. Penney eventually closes its stores, J.C. Penney will offer curbside pickup in states where stay-at-home orders are still in place, J.C. Penney online will continue to operate as one of the key factors in the 118-year-old company rebuilding its business, and hoping to emerge from bankruptcy, during and after COVID19.
There’s are 2 types of bankruptcy, Chapter 7 and Chapter 11, Chapter 11 allows you to continue operating where sales go to debts, and Chapter 7 is sudden closure, no warning, products and fixtures left behind for fire sale, mainly ending up at auction.
Daniel Quintanilla
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