What We’re Reading This Week [May 18, 2020]
J.C. Penney Company, Inc. is the latest retailer to file for chapter 11 bankruptcy, reports CNN. Although the COVID-19 pandemic played a role in the 118-year old retailer’s decision to file for bankruptcy protection, the company has struggled for nearly a decade to overcome slumping sales and profits. The company has reportedly obtained agreement from a majority of its lenders on a turnaround plan. [CNN; May 15, 2020]
The New York Times discusses the impact leveraged buyouts may have had on the recent bankruptcies of retailers J. Crew and Neiman Marcus. [N.Y. Times; May 15]
The Financial Times reports that the United States’ economic recovery from the COVID-19 pandemic could be threatened in the event that bankruptcy courts see a substantial uptick in filings and recommends that the Trump Administration take action to avoid the bankruptcy courts becoming overwhelmed. [FT; May 14, 2020]
In its response to Forever 21’s motion to extend its plan exclusivity period, the United States Trustee for Region 3 observed that the Debtors will be unlikely to propose a confirmable plan because the Debtors’ wind down fund currently consists of approximately $5.5 million while the Debtors currently have approximately $100 million in post-petition trade debt that the UST believes would need to be paid in full to confirm a plan. Although the UST did not object to extension of the plan exclusivity period, it indicated that, given the difficulty it anticipates the Debtors will have in proposing a confirmable plan, dismissal or conversion to chapter 7 may be appropriate in the future. [In re Forever 21, Inc.; May 8, 2020]
