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J.C. Penney Taps Debt Restructuring Advisers

J.C. Penney Co. Inc. has hired advisers to explore debt restructuring options that would buy more time for the money-losing U.S. retailer to forge a turnaround, Reuters reported. The 117-year-old department store chain’s move represents a high-stakes attempt to get its financial house in order before its cash coffers dwindle and its debt, totaling roughly $4 billion, comes due in the next few years. The Plano, Texas-based company faces fierce competition from discount retailers such as the TJX Cos Inc.’s Marshalls and T.J. Maxx chains, and J.C. Penney has struggled to boost the profile of its e-commerce business to rival established players such as Inc. While J.C. Penney has more than $1.5 billion available under a revolving credit line, investors have continued to sell off the retailer’s shares in response to financial losses. Its credit rating is deep in junk territory, increasing its borrowing costs. The retailer, which employs 95,000 people and operates more than 860 stores, is exploring options that could include raising additional cash or negotiating with creditors to push out debt maturities. Read more

Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store. 

Barneys Is Considering Bankruptcy as Rent Increases, Cash Tightens

Luxury department store Barneys New York Inc. is exploring restructuring options that could include filing for bankruptcy as it struggles to keep up with higher rent and adapt to changing consumer habits, Bloomberg News reported. Barneys is working with financial advisers at MIII Partners and lawyers at Kirkland & Ellis. The company hasn’t made a final decision on whether to pursue its plan in or out of court. Founded as a men’s retailer in 1923 in downtown Manhattan, Barneys became the icon of high fashion and innovation for women and men in the 1970s. Today, Barneys New York operates flagship stores in New York City on Madison Avenue and downtown in Chelsea, as well as Beverly Hills, Chicago, Seattle, Boston, San Francisco and Las Vegas. Barneys has around $250 million of debt obligations, including a $200 million asset-based revolver led by Wells Fargo & Co. and a $50 million term loan facility.

Toys ‘R’ Us Is Back from the Dead, but with a Different Footprint

A year after shutting all its U.S. stores, Toys “R” Us is making a comeback, the Washington Post reported. The international chain, which filed for bankruptcy in 2017, is opening two mall stores this holiday season and bringing back its website. But don’t expect the Toys “R” Us you’re used to. For one, the new locations — at the Galleria in Houston and Westfield Garden State Plaza in Paramus, N.J. —will be much smaller than their predecessors. And instead of aisles overflowing with packaged toys, the focus will be on open play areas, interactive displays and spaces for special events and birthday parties. The revamped Toys “R” Us is a joint venture between Tru Kids Brands — which acquired the Toys “R” Us brand in January — and b8ta, a chain of “experiential” consumer electronics stores. The new effort is being led by Barry and Phillip Raub, the founder of b8ta.

Ohio’s Proposed FirstEnergy Solutions Bailout Lifts Bonds

FirstEnergy Solutions Corp.’s bonds rallied yesterday as Ohio lawmakers were poised to funnel $150 million in annual subsidies to the bankrupt company’s two money-losing nuclear plants in the state, the Wall Street Journal reported. The state Senate voted 19-12 on Wednesday in favor of the subsidy legislation, which would prop up the Davis-Besse and Perry nuclear plants on Lake Erie. The bill now goes back to Ohio’s House of Representatives for revisions. FES had previously informed lawmakers that it would need to shut down the plants if it didn’t receive state funding by Wednesday. The subsidy, which would amount to a total value of close to $1 billion through 2026, would alter the assumptions included in the company’s bankruptcy-exit strategy, which hasn’t been approved by the court overseeing the chapter 11 proceedings.

Vanguard Emerges from Chapter 11 Bankruptcy as Grizzly Energy

Vanguard Natural Resources, Inc. announced that it successfully completed its financial restructuring and emerged from chapter 11 as a new limited liability company under the name of Grizzly Energy, LLC, ABL Advisor reported. Through its financial restructuring, the company eliminated more than $500 million of secured debt from its balance sheet and significantly enhanced its financial flexibility. At its emergence, the company is entering into an amended and restated $65 million reserve-based revolving credit facility, a first-lien term loan A facility of $65 million and a "last out" first-lien term loan B facility of $285 million. The initial borrowing base under the revolving credit facility shall be $65 million, with the first scheduled redetermination of the revolving credit facility borrowing base in April 2020.

More Puerto Rico Protests Planned as Governor Resists Calls to Resign

Massive and at times violent protests in Puerto Rico showed no sign of stopping as labor unions yesterday organized a march today to keep up pressure on the governor to resign, while dozens of guns were stolen in a raid on a police firearms center, Reuters reported. Thousands of protesters have jammed streets in San Juan since Saturday, calling on Governor Ricardo Rossello to step down after the leak of a raft of controversial and vulgar text messages between him and his closest allies. The scandal comes on the heels of a federal probe into government corruption on the bankrupt island. The political turmoil comes at a critical stage in the U.S. territory’s bankruptcy. It has also raised concerns with U.S. lawmakers who are weighing the island’s requests for billions of federal dollars for health care and for recovery efforts following devastating hurricanes in 2017.