(CNN) – Time is running out for JCPenney.
With two missed debt payments in the past month and only a tiny fraction of its stores able to reopen, JCPenney could be the next iconic retailer to file for bankruptcy – possibly as soon as this week.
The JCPenney website lists nine locations in Massachusetts and New Hampshire.
JCPenney’s first missed debt payment, $12 million owed to bondholders, came on April 15. The second missed payment, of $17 million, came on a line of credit last Thursday. The grace periods for the two missed payments expire on Thursday and Friday of this week.
The company won’t say whether it plans to file for bankruptcy before those grace periods end, but many industry experts expect it to. JCPenney’s fate is clearly in the hands of its lenders.
“JCPenney has made the strategic decision not to make any interest payments due on May 7 and to take advantage of the grace period to continue ongoing constructive discussions with lenders and maximize financial flexibility,” the company said the week. last. “JCPenney has been in discussions with its lenders since mid-2019 to assess options to strengthen its balance sheet, a process that has become all the more important as our stores have also closed due to the pandemic.”
The company had $3.6 billion in long-term debt on its books as of February 1.
Shares of JCPenney fell nearly 8% on Monday, falling to less than 16 cents per share. Its stock is down 86% so far this year, falling so low that it may not trade on the New York Stock Exchange later this year, even if it does not file for bankruptcy.
As states lift stay-at-home orders, JCPenney and other retailers have begun reopening stores. Only 16 JCPenney stores out of nearly 850 nationwide have reopened. Fifteen more stores are allowing curbside order pickup, with more store openings expected to be announced on Wednesday.
Paradoxically, more store reopenings could actually increase the risks of filing for bankruptcy. When companies file for bankruptcy and intend to remain in business, they must take out additional loans to finance these operations during the reorganization. But these loans are often repaid with proceeds from store closing sales. Without them, reorganization in the event of bankruptcy becomes more difficult.
JCPenney has been announcing store closure plans for years, most recently in February when it announced it would close six additional stores. Its number of stores is down from 1,000 three years ago.
With about 850 stores remaining and 90,000 employees, JCPenney is one of the largest U.S. retailers to file for bankruptcy in recent years. It has more stores in the United States than other struggling companies such as Sears, Toys “R” Us or Sports Authority when they filed their application.
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