J.C. Penney gets a verbal confirmation of its bankruptcy plan from judge as sale remains pending – The Dallas Morning News

J.C. Penney is almost at the end of its bankruptcy after getting a verbal confirmation Tuesday of its plan from U.S. Bankruptcy Court Judge David Jones.

That plan of reorganization includes the sale of the retail company to landlords Simon and Brookfield and a big chunk of its real estate to lenders to pay down debt. The pending transaction includes a complex document for the transfer of 160 stores and six distribution centers to Penneys lenders.

The sale, which has missed several deadlines, is expected to close Wednesday, Penneys lawyer Josh Sussberg said during the hearing.

Penneys shareholders continued to object to the plans treatment of their rights to future claims, their lawyer Mathew Okin said at the hearing. In response, Judge Jones granted shareholders pre-petition claim status, giving them future rights if they pursue a legal case. The judge deemed himself the gatekeeper of that status but noted that any shareholder claims would be dwarfed by creditors who have agreed to the plan of reorganization.

Penneys shareholders are holding stock with no value but havent accepted that the bankruptcy plan has canceled their equity. Jones had allowed them to form an ad hoc equity committee and approved funds to pay fees for financial and legal assistance.

At that time, Jones had said he was doing it so shareholders could be satisfied of their status in this case. Its very rare for shareholders, who are at the end of the line in the pecking order for payment of claims, to receive any payout from a bankruptcy.

Based on letters he has received, Jones said, A lot of people still dont understand this process.

Jones scolded shareholders for unfairly attacking lawyers and financial advisers in the case, saying some of them have promoted conspiracy theories.

Im ashamed I live in a country where people are unfairly targeted, Jones said. Im ashamed of some of you. I want us all to be more accepting.

Penneys lawyer, Sussberg, has been one of the shareholders main targets, as was Penneys investment banker, David Kurtz of Lazard.

Both were involved in the Toys R Us case that ended up in a liquidation, and Sussberg brought up that 2018 case during the hearing Tuesday, saying that they didnt want to relive that and that Penney was saved against all odds.

There was no grand master plan to steal value from shareholders, Sussberg said. Shareholders believed there was more value inside Penney, but they havent been able to prove it.

Sussberg recounted a story from his father when he told him he was holding a valuable baseball trading card. That card isnt worth anything unless someone is willing to pay you for it.

Twitter: @MariaHalkias

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J.C. Penney gets a verbal confirmation of its bankruptcy plan from judge as sale remains pending - The Dallas Morning News