J.C. Penney Lenders Led by Aurelius Seek to Slow Property Sale, , on October 24, 2020 at 4:19 am

Financial News
By High West Capital Partners
On October 24, 2020
In Financial News
Tags:

(Bloomberg) — A group of creditors to J.C. Penney Co. is seeking to slow the sale of the bankrupt retailer’s real estate to another group of lenders, saying that it provides the buyers an undeserved windfall and reeks “of not only greed but abhorrent bad faith.”The objecting creditors, led by Aurelius Capital Management, say they submitted a $750 million competing bid for J.C. Penney’s properties that would provide $600 million more to the bankrupt estate and more evenly distribute proceeds among creditors. They’re asking Judge David Jones to order a separate process for the property sale to the so-called DIP lender group, while proceeding with the sale of retailer’s operations to its two biggest landlords.“The lure of a windfall has so clouded the DIP lender group’s judgment that its members are seeking value far in excess of their entitlements under the Bankruptcy Code,” lawyers for the dissenting creditors wrote in an objection submitted Friday evening. The currently proposed sale “is manifestly contrary to the best interests of the estates and their creditors,” according to the filing, which was made with the U.S. Bankruptcy Court in Corpus Christi, Texas.A representative for the DIP lenders didn’t immediately comment, and J.C. Penney declined to comment.Holiday SeasonJ.C. Penney has been racing to wrap up the planned two-part sale of its assets as the crucial holiday season approaches. The retailer has said the deal will save more than 60,000 jobs.Under the agreement, J.C. Penney’s assets would be bought by a group of firms including H/2 Capital Partners that provided J.C. Penney with debtor-in-possession, or DIP, financing to keep it operating while in bankruptcy.The lender group would then sell the retail operations to mall landlords Simon Property Group Inc. and Brookfield Property Partners.The Aurelius-led creditors say that the deal is structured in a way that will deliver a 162.4% recovery for the DIP lenders, while leaving them with a recovery of just 10.3%. Under their competing bid, the DIP lenders would get 100% of their money back while allowing the minority group to recover 46.1% of J.C. Penney’s outstanding $1.57 billion of first-lien debt.Two PartsThe creditors are asking the court to split approval of the two transactions, which are set to be considered by the Jones during a Nov. 2 hearing. Instead, they want to delay a hearing on the real estate sale until Nov. 24.Such a delay could upend Chief Executive Officer Jill Soltau’s plans to have J.C. Penney out of bankruptcy ahead of the crucial December 2020 holiday season. Joshua Sussberg, J.C. Penney’s bankruptcy lawyer, has said a speedy sale is essential, warning that “otherwise-viable retail enterprises too often fail to emerge from Chapter 11 cases as a result of delay.”The existing agreement, though, has faced its own set of challenges. Talks stalled at one point between the DIP lenders and the mall landlords, with the proposed plan being hammered out during marathon mediation sessions last weekend. Discussions over the master lease agreement were scheduled to continue into this weekend.The DIP lenders and landlords were given until Monday to finalize a master lease agreement that Jones said he assumed would be “one of the longest and most complex lease agreements known to mankind.”The case is J.C. Penney Company Inc., 20-20182, U.S. Bankruptcy Court for the Southern District of Texas (Corpus Christi). To view the docket on Bloomberg Law, click hereFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.,

J.C. Penney Lenders Led by Aurelius Seek to Slow Property Sale(Bloomberg) — A group of creditors to J.C. Penney Co. is seeking to slow the sale of the bankrupt retailer’s real estate to another group of lenders, saying that it provides the buyers an undeserved windfall and reeks “of not only greed but abhorrent bad faith.”The objecting creditors, led by Aurelius Capital Management, say they submitted a $750 million competing bid for J.C. Penney’s properties that would provide $600 million more to the bankrupt estate and more evenly distribute proceeds among creditors. They’re asking Judge David Jones to order a separate process for the property sale to the so-called DIP lender group, while proceeding with the sale of retailer’s operations to its two biggest landlords.“The lure of a windfall has so clouded the DIP lender group’s judgment that its members are seeking value far in excess of their entitlements under the Bankruptcy Code,” lawyers for the dissenting creditors wrote in an objection submitted Friday evening. The currently proposed sale “is manifestly contrary to the best interests of the estates and their creditors,” according to the filing, which was made with the U.S. Bankruptcy Court in Corpus Christi, Texas.A representative for the DIP lenders didn’t immediately comment, and J.C. Penney declined to comment.Holiday SeasonJ.C. Penney has been racing to wrap up the planned two-part sale of its assets as the crucial holiday season approaches. The retailer has said the deal will save more than 60,000 jobs.Under the agreement, J.C. Penney’s assets would be bought by a group of firms including H/2 Capital Partners that provided J.C. Penney with debtor-in-possession, or DIP, financing to keep it operating while in bankruptcy.The lender group would then sell the retail operations to mall landlords Simon Property Group Inc. and Brookfield Property Partners.The Aurelius-led creditors say that the deal is structured in a way that will deliver a 162.4% recovery for the DIP lenders, while leaving them with a recovery of just 10.3%. Under their competing bid, the DIP lenders would get 100% of their money back while allowing the minority group to recover 46.1% of J.C. Penney’s outstanding $1.57 billion of first-lien debt.Two PartsThe creditors are asking the court to split approval of the two transactions, which are set to be considered by the Jones during a Nov. 2 hearing. Instead, they want to delay a hearing on the real estate sale until Nov. 24.Such a delay could upend Chief Executive Officer Jill Soltau’s plans to have J.C. Penney out of bankruptcy ahead of the crucial December 2020 holiday season. Joshua Sussberg, J.C. Penney’s bankruptcy lawyer, has said a speedy sale is essential, warning that “otherwise-viable retail enterprises too often fail to emerge from Chapter 11 cases as a result of delay.”The existing agreement, though, has faced its own set of challenges. Talks stalled at one point between the DIP lenders and the mall landlords, with the proposed plan being hammered out during marathon mediation sessions last weekend. Discussions over the master lease agreement were scheduled to continue into this weekend.The DIP lenders and landlords were given until Monday to finalize a master lease agreement that Jones said he assumed would be “one of the longest and most complex lease agreements known to mankind.”The case is J.C. Penney Company Inc., 20-20182, U.S. Bankruptcy Court for the Southern District of Texas (Corpus Christi). To view the docket on Bloomberg Law, click hereFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

,

Instant Quote

Enter the Stock Symbol.

Select the Exchange.

Select the Type of Security.

Please enter your First Name.

Please enter your Last Name.

Please enter your phone number.

Please enter your Email Address.

Please enter or select the Total Number of Shares you own.

Please enter or select the Desired Loan Amount you are seeking.

Please select the Loan Purpose.

Please select if you are an Officer/Director.

High West Capital Partners, LLC may only offer certain information to persons who are “Accredited Investors” and/or “Qualified Clients” as those terms are defined under applicable Federal Securities Laws. In order to be an “Accredited Investor” and/or a “Qualified Client”, you must meet the criteria identified in ONE OR MORE of the following categories/paragraphs numbered 1-20 below.

High West Capital Partners, LLC cannot provide you with any information regarding its Loan Programs or Investment Products unless you meet one or more of the following criteria. Furthermore, Foreign nationals who may be exempt from qualifying as a U.S. Accredited Investor are still required to meet the established criteria, in accordance with High West Capital Partners, LLC’s internal lending policies. High West Capital Partners, LLC will not provide information or lend to any individual and/or entity that does not meet one or more of the following criteria:

1) Individual with Net Worth in excess of $1.0 million. A natural person (not an entity) whose net worth, or joint net worth with his or her spouse, at the time of purchase exceeds $1,000,000 USD. (In calculating net worth, you may include your equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Your inclusion of equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.)

2) Individual with $200,000 individual Annual Income. A natural person (not an entity) who had individual income of more than $200,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

3) Individual with $300,000 Joint Annual Income. A natural person (not an entity) who had joint income with his or her spouse in excess of $300,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

4) Corporations or Partnerships. A corporation, partnership, or similar entity that has in excess of $5 million of assets and was not formed for the specific purpose of acquiring an interest in the Corporation or Partnership.

5) Revocable Trust. A trust that is revocable by its grantors and each of whose grantors is an Accredited Investor as defined in one or more of the other categories/paragraphs numbered herein.

6) Irrevocable Trust. A trust (other than an ERISA plan) that (a)is not revocable by its grantors, (b) has in excess of $5 million of assets, (c) was not formed for the specific purpose of acquiring an interest, and (d) is directed by a person who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of an investment in the Trust.

7) IRA or Similar Benefit Plan. An IRA, Keogh or similar benefit plan that covers only a single natural person who is an Accredited Investor, as defined in one or more of the other categories/paragraphs numbered herein.

8) Participant-Directed Employee Benefit Plan Account. A participant-directed employee benefit plan investing at the direction of, and for the account of, a participant who is an Accredited Investor, as that term is defined in one or more of the other categories/paragraphs numbered herein.

9) Other ERISA Plan. An employee benefit plan within the meaning of Title I of the ERISA Act other than a participant-directed plan with total assets in excess of $5 million or for which investment decisions (including the decision to purchase an interest) are made by a bank, registered investment adviser, savings and loan association, or insurance company.

10) Government Benefit Plan. A plan established and maintained by a state, municipality, or any agency of a state or municipality, for the benefit of its employees, with total assets in excess of $5 million.

11) Non-Profit Entity. An organization described in Section 501(c)(3) of the Internal Revenue Code, as amended, with total assets in excess of $5 million (including endowment, annuity and life income funds), as shown by the organization’s most recent audited financial statements.

12) A bank, as defined in Section 3(a)(2) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

13) A savings and loan association or similar institution, as defined in Section 3(a)(5)(A) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

14) A broker-dealer registered under the Exchange Act.

15) An insurance company, as defined in Section 2(13) of the Securities Act.

16) A “business development company,” as defined in Section 2(a)(48) of the Investment Company Act.

17) A small business investment company licensed under Section 301 (c) or (d) of the Small Business Investment Act of 1958.

18) A “private business development company” as defined in Section 202(a)(22) of the Advisers Act.

19) Executive Officer or Director. A natural person who is an executive officer, director or general partner of the Partnership or the General Partner, and is an Accredited Investor as that term is defined in one or more of the categories/paragraphs numbered herein.

20) Entity Owned Entirely By Accredited Investors. A corporation, partnership, private investment company or similar entity each of whose equity owners is a natural person who is an Accredited Investor, as that term is defined in one or more of the categories/paragraphs numbered herein.

Please read the notice above and check the box below to continue.

Singapore

168 Robinson Road,
Capital Tower, Singapore 068912
+65 3105 1295

Taiwan

5th Floor, No. 1-8, Section 5, Zhongxiao East Road, Taipei

Hong Kong

R91, 3rd Floor,
Eton Tower, 8 Hysan Ave.
Causeway Bay, Hong Kong
+852 3002 4462

Australia

44 Martin Place, Sydney 2000 Australia
+02 8319 3232

Indonesia

Millennium Centennial Center, 38th Floor, Jl. Jend. Sudirman Kav. 25
Jakarta 12920, Indonesia

Market Coverage