The lockdown has taken down a retail giant.
The nationwide department store chain, J.C. Penney, filed for Chapter 11 bankruptcy protection Friday evening.
J.C. Penney has received debtor-in-possession financing of $900 million of which $450 million is new money.
J.C. Penney said it believes the new financing and cash generated from its business, is expected to be sufficient to sustain its business and restructuring needs.
But, as part of the financing, J.C. Penney must explore additional opportunities to maximize value, including a third-party sale process.
The company, founded by James Cash Penney in 1902, operated 846 department stores in 46 states as of February 1.
J.C. Penney hinted at some store closures in the bankruptcy filing but didn’t go into specifics. It is, however, possible the retail chain might not survive at all.
The department store chain was dealing with a heavy debt burden before the lockdown occurred and the shutdown of stores across a large swath of the United States did it in.
“The Coronavirus (COVID-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country. As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company. Until this pandemic struck, we had made significant progress rebuilding our company under our Plan for Renewal strategy – and our efforts had already begun to pay off. While we had been working in parallel on options to strengthen our balance sheet and extend our financial runway, the closure of our stores due to the pandemic necessitated a more fulsome review to include the elimination of outstanding debt,” said J.C. Penney CEO Jill Soltau in a statement.
JCP will not be the only victim of the lockdown, overall we are seeing a shrinkage of the productive capacity in the country while at the same time witnessing a massive (trillions of dollars) Federal Reserve money pump. More money floating around and fewer products and services is a prescription for accelerating price inflation.
But please note, it was not COVID-19 that caused the bankruptcy but the over-the-top lockdowns of much of the country by government officials who acted with no evidence (no scientific studies) that lockdowns are a sound policy to deal with the virus.